Steve Owns a Bike Store

question 8

Multiple Choice

Steve owns a bike store. If he decided to expand the size of his store so that he could sell more bikes, how would he know if he is experiencing economies of scale in the long run?

• A) His long-run average cost of selling each bike remains unchanged.
• B) His long-run average cost of selling each bike decreases.
• C) His long-run average cost of selling each bike increases.
• D) His long-run total cost of selling bikes increases.
• E) His long-run fixed cost of selling bikes increases.

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Definitions:

Recent University Graduates

Individuals who have completed their degree or diploma courses from a university or college and have just entered the job market.

Compensation System

An organized approach implemented by businesses to pay and reward employees for their contributions to the organization.

Pension Plans

Retirement plans funded by employers or employees where regular payments are made to beneficiaries during their retirement years.

Outsourcing

The practice of hiring third parties to perform services, handle operations or provide goods that are either cost-prohibitive or outside the company's core competencies.