A measure of the reserve capacity a process has to handle unexpected increases in demand is the:

• A. marginal utility
• B. price elasticity
• C. opportunity cost
• D. buffer capacity

Answer: (D)

Verified step by step guidance

1. Understand the concept of 'reserve capacity' in the context of microeconomics, which refers to the ability of a process or system to handle unexpected increases in demand without failure or significant delay.
2. Review the given options and their definitions: 'marginal utility' measures the additional satisfaction from consuming one more unit of a good; 'price elasticity' measures responsiveness of quantity demanded to price changes; 'opportunity cost' is the value of the next best alternative foregone.
3. Recognize that none of the provided options directly describe the ability to handle unexpected demand increases, which is more about system flexibility or slack.
4. Identify that 'buffer capacity' is the term used to describe the reserve or extra capacity available to absorb shocks or unexpected increases in demand, ensuring smooth operation.
5. Conclude that 'buffer capacity' is the correct term for the measure of reserve capacity a process has to handle unexpected increases in demand.