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Running head: CRITICAL THINKING QUESTIONS
Critical Thinking Questions for Chapter 6
CRITICAL THINKING QUESTIONS
Overproduction refers to the manufacturing of produce or a service in its excess form.
Underproduction, on the other hand, refers to the opposite of overproduction: meaning that the
produce is manufactured in less required quantity. In the financial side, overproduction, over
stock, refers to the supplying of stock more than the demand of the same in the given market
The over or under production of stuff may have a direct or indirect impact on costs. For
instance, when a firm is involved in the overproduction of its products, the resulting superfluity
will eventually lead to the lowering of values perhaps of unsold goods. This will in return drive
to cost of trading which includes the value of effort leading to a drastic increase in cost. In
overproduction, the supply would be more than the demand hence low costs of the product. In
underproduction, the outcome is that there is an in the availability of some substances in the set
menu. Now in most cases, when a customer visits the firm to do a purchase and finds that's the
desired commodity is not available, chances of he/she returning again are very minimal. This
will, in turn, lead to low profits after the company deducts all its overheads such as the
operational costs. When a company manufactures ...
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