Economies of Scope Refers to Situations Where Per Unit Costs

question 11

Multiple Choice

Economies of Scope refers to situations where per unit costs are:

• A)Unaffected when two or more products are produced
• B)Reduced when two or more products are produced
• C)Increased when two or more products are produced
• D)Demonstrating constant returns to scale
• E)Demonstrating decreasing returns to scale

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Definitions:

Beta

A benchmark for evaluating the volatility or systematic risk of a security or portfolio vis-à-vis the wider market.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, often represented by the yield on government securities.

Market Portfolio

A theoretical bundle of investments that includes all types of assets available in the market, with each asset weighted by its market capitalization.

Dividend Decline

A situation in which a company reduces the amount of dividends declared and distributed to its shareholders compared to previous periods.