Which of the following statements is NOT true? A. When capacity is inadequate, market share can shrink. B. When capacity is inadequate, customers can be lost. C. When excess capacity exists, cost can increase. D. When excess capacity exists, cost can decrease.

Question

Social Studies

Brendon Soto

28 January, 21:55

Which of the following statements is NOT true? A. When capacity is inadequate, market share can shrink. B. When capacity is inadequate, customers can be lost. C. When excess capacity exists, cost can increase. D. When excess capacity exists, cost can decrease.

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Answers (1)

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Jovan · Answer 1

C. When excess capacity exists, cost can increase

Explanation:

The only False statement in all the given four statement is option C that is When excess capacity exists, cost can increase.

Clearly, the above statement is false because when by the principle of economies of scale at higher capacity, the overall cost of production decreases. (in simple terms, higher the supply, lesser will be the demand.)