Output is likely to respond more to sales increases in high-output periods than in low-output periods, provided that firms have enough capital and labor to support the output increase.

Question

Quizplus · Accepted Answer

This statement is true because during high-output periods, firms have the capacity to produce more goods and therefore can accommodate the increased demand resulting from sales increases. In contrast, during low-output periods, firms may not have the resources to meet increased demand and may be constrained in their ability to respond to sales increases.

Output Is Likely to Respond More to Sales Increases in High-Output