Which of the Following Is an Example of Economies of Scale

question 343

Multiple Choice

Which of the following is an example of economies of scale?

• A) As the computer industry has expanded, the number of professionally trained computer programmers has also increased, which has caused the salaries of computer programmers to increase.
• B) To attract firms to locate in its state, the state government reduced the tax rate that businesses must pay on its profits, thus lowering the costs to firms who locate in the state.
• C) A firm increases in size and is therefore able to lower its health insurance costs because as the size of the group insured increases, the premium per person decreases substantially.
• D) As the demand for calculators increased, the price of calculators actually fell.

---

Definitions:

CPI Increased

An indication that the Consumer Price Index has risen, signifying a period of inflation where consumer goods and services prices have gone up.

Base Year

A specific year chosen as a reference point for financial or economic data analysis.

Purchasing Power

The amount of goods or services that can be bought with one unit of a currency, showcasing its value.

CPI

An index measuring the variation in price level of a market basket of consumer goods and services purchased by households, frequently used to identify periods of inflation or deflation.