Possible Sources of Economies of Scale (Size)within a Production Plant

question 9

Multiple Choice

Possible sources of economies of scale (size) within a production plant include:

• A) specialization in the use of capital and labor
• B) imperfections in the labor market
• C) transportation costs
• D) a and b
• E) a and c

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Definitions:

Marginal Cost

The extra financial outlay needed for manufacturing another unit of a product or service.

Marginal Product

The boost in production one can expect by adding an extra unit of labor or capital, ceteris paribus.

Wage Rate

The amount of compensation workers receive in exchange for their labor, typically expressed per hour or per unit of work.

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts as well as the physical factors of production.