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Examples of overcapacity and under capacity

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Find and discuss business examples of overcapacity and under capacity. Your examples should provide arguments for both sides. (Question 6, page 348)

Historically, the American industrial base has run an excess capacity of around 24%. There are strong arguments, both pro and con, of this large magnitude of excess capacity. On the pro side, corporations may be geared up for anticipated future contracts or support of military surges. On the con side, the heavy investment in sunk costs related to the excess capacity takes away much of the stockholders profit.

Reference no: EM131290803

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