Economies of Scale Can Be Caused by

question 43

Multiple Choice

Economies of scale can be caused by

• A)all of the following
• B)short-run increases in marginal productivity
• C)the use of larger, more specialized machines
• D)higher information costs as a firm expands
• E)bureaucratic red tape as a firm expands

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Definitions:

Fixed Overhead

The set of expenses that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Product Costs

Costs directly associated with the creation of a product, including materials, labor, and manufacturing overhead.

GAAP

Generally Accepted Accounting Principles, a set of standards and procedures for financial reporting used in the United States.

Variable Costing

An accounting method that only includes variable costs in product costing and decision-making.