Firms may be asked to accept a special order of their product for a reduced price if
A)it can be concealed from the government.
B)excess capacity exists.
C)the order is small.
D)the plant is producing at maximum capacity.

Question

Quizplus · Accepted Answer

If excess capacity exists, the firm can produce the special order without sacrificing production of their regular orders. This allows them to accept a reduced price without incurring additional costs. Choices A and C are unethical and illegal, and choice D is not feasible as accepting the special order at a reduced price while producing at maximum capacity would result in losses for the firm.

Firms May Be Asked to Accept a Special Order of Their