Question

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.

Answer 1

C. When excess capacity​ exists, cost can increase

Step-by-step 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.)