Question: Define the term capacity. [2 marks] 2. Describe TWO types of capacity. [4 marks] 3. Drinks-a-Lot is a highly profitable energy drink manufacturing company operating

Define the term capacity. [2 marks]

2. Describe TWO types of capacity. [4 marks]

3. Drinks-a-Lot is a highly profitable energy drink manufacturing company operating in the

Caribbean. The energy drinks market has been expanding and Drinks-a-Lot wants to capitalize on the opportunities for growth and profitability. The company has considered outsourcing. However, the production manager has warned the president of the company that the business could experience diseconomies of scale.

(a) Distinguish between economies of scale and diseconomies of scale. [4 marks]

(b) Outline TWO ways in which Drinks-a-Lot can increase its capacity. [4 marks]

long term. [12 marks]

(d) Discuss TWO problems that Drinks-a-Lot could experience if they continue to expand

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