Final answer:
The problem that exists when a firm turns business down during periods of economic expansion is related to capacity utilization. This is because business investment in additional capacity is crucial for addressing increased demand and sustaining growth.
Step-by-step explanation:
When a firm turns business down during periods of economic expansion, a problem exists in the area of capacity utilization. Firms typically invest in additional capacity during such periods, acquiring new equipment or constructing new facilities to meet the rising demand and increase profits. When they are unable to do so, it indicates an inability to adequately scale up manufacturing capabilities, possibly due to limitations in financial resources or strategic planning failures. Business investment is essential for economic growth and often requires firms to access financial markets for the necessary capital.