If a firm is operating at its full capacity, future increases in sales will require _____.
A)it to attain economies of scale in its operations
B)it to issue new long-term debt
C)large amounts of new spontaneously generated funds to support expected growth
D)additional fixed assets
E)lumpy current assets to be purchased

Question

If a firm is operating at its full capacity, future increases in sales will require _____. 
A)it to attain economies of scale in its operations
B)it to issue new long-term debt
C)large amounts of new spontaneously generated funds to support expected growth
D)additional fixed assets
E)lumpy current assets to be purchased

Quizplus · Accepted Answer

If a firm is already operating at full capacity, then it will need to invest in additional fixed assets to increase production and meet the demand for increased sales. This is because the firm has no spare capacity to meet the extra demand, and therefore, it must invest in additional fixed assets to increase capacity. Options A, B, and C are not necessarily required for firms at full capacity, as they are more related to financing and cost management rather than production capacity. Option E is not directly related to production capacity and is more related to balance sheet management.

If a Firm Is Operating at Its Full Capacity, Future