If a firm has excess production capacity, it
A) can serve as a safety net if demand suddenly picks up.
B) may be a sign that there's too much competition.
C) may make sense for the marketing manager to try to find new markets for current products.
D) can be costly.
E) all of the above.

Question

Quizplus · Accepted Answer

All of the given options are correct. Having excess production capacity can serve as a safety net in case there is a sudden increase in demand. However, it may also indicate that there is too much competition in the market. In this case, it may be a good idea for the marketing manager to try to find new markets for the current products. Excess production capacity can also be costly for the firm if it is not being utilized effectively.

If a Firm Has Excess Production Capacity, It