25 Capacity utilisation (A Level)

25 Capacity utilisation (A Level)

11th - 12th Grade

10 Qs

quiz-placeholder

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25 Capacity utilisation (A Level)

25 Capacity utilisation (A Level)

Assessment

Quiz

Business

11th - 12th Grade

Hard

Created by

Aishwarya Gurung

Used 5+ times

FREE Resource

10 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

If a firm is operating at 70% of its capacity, which one of the following statements is true?

Fixed costs are currently lower than they would be at full capacity.

There is excess capacity.

The firm would have to take on more workers to increase production.

The firm is making a profit

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

It is estimated that businesses in the car industry will be profitable if for every four cars being produced and sold there is only the capacity to produce five cars. What level of capacity utilisation is necessary to ensure profit is made?

125%

20%

75%

80%

3.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

As a firm increases its capacity utilisation from 50% to 60%, then, other things being equal, average fixed costs will:

remain unchanged

increase by 20%

fall

become 0

4.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

In a particular industry, it was observed that worldwide capacity rose to 15 million units a week in the fourth quarter of 2014, up from 14 million in the third quarter. Capacity utilisation also increased to 95%, from 90% in the third quarter. By how much did actual production per week increase between the third and fourth quarter?

165,000 units

1 million units

1.65 million units

12.6 million units

5.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

A manufacturer has a capacity of 100,000 units per month. At this level of production, the fixed cost per unit is $0.10 and the variable cost per unit is $0.15. What is the average total cost at a capacity utilisation of 40% (assume that variable costs are linear)?

$0.40

$0.25

$0.475

$0.625

6.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

A firm that is faced with the problem of long-term excess capacity is most likely to benefit from which one of the following strategies?

rationalisation

increasing production and adding to inventories

reducing employee holidays so that more can be produced

reducing promotional expenditure

7.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Which one of the following is not a problem associated with full-capacity working? a a decline in customer service if demand increases b a reduction in downtime during which maintenance can be carried out c inability to meet increased levels of demand d worker demotivation due to fears over job security

a decline in customer service if demand increases

a reduction in downtime during which maintenance can be carried out

inability to meet increased levels of demand

worker demotivation due to fears over job security

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