If higher efficiency is achieved in the e-waste factory, which outcome is most likely?

If higher efficiency is achieved in the e-waste factory, which outcome is most likely?

• A. Higher overheads despite increased output.
• B. Lower unit costs due to better capacity utilization.
• C. Worsened quality due to rushed processes.
• D. No change in profitability.

Answer: (B)

When efficiency improves in a factory, the plant gets more output from the same resources, or uses fewer inputs for the same output. This boosts capacity utilization and lowers the average cost of producing each unit because fixed costs are spread over more units. So the most likely outcome is lower unit costs due to better capacity utilization. If you can produce more items with the same overhead, the cost per unit falls, which often supports higher profitability, assuming selling prices and demand stay steady. The other ideas don’t fit as well: higher overheads with more output would suggest inefficiency or added costs beyond the efficiency gain; quality would not necessarily worsen just because processes are more efficient (and often efficiency aims to maintain or improve quality); and profitability changing nothing contradicts the clear cost reduction that comes with spreading fixed costs over more units.

When efficiency improves in a factory, the plant gets more output from the same resources, or uses fewer inputs for the same output. This boosts capacity utilization and lowers the average cost of producing each unit because fixed costs are spread over more units.

So the most likely outcome is lower unit costs due to better capacity utilization. If you can produce more items with the same overhead, the cost per unit falls, which often supports higher profitability, assuming selling prices and demand stay steady.

The other ideas don’t fit as well: higher overheads with more output would suggest inefficiency or added costs beyond the efficiency gain; quality would not necessarily worsen just because processes are more efficient (and often efficiency aims to maintain or improve quality); and profitability changing nothing contradicts the clear cost reduction that comes with spreading fixed costs over more units.