Compared to a firm operating at 100% of capacity, firms that are operating at less than full capacity will require greater new external funds when sales increase.

Question

Quizplus · Accepted Answer

Firms operating at less than full capacity have idle capacity that can be used to meet increased demand without requiring additional external funds. Therefore, they would require lesser new external funds compared to firms operating at 100% capacity.

Compared to a Firm Operating at 100% of Capacity, Firms