Natural Variations

question 121

Multiple Choice

Natural variations:

• A) are variations that are to be identified and investigated.
• B) are variations that can be traced to a specific cause.
• C) are the same as assignable variations.
• D) lead to occasional false findings that processes are out of control.
• E) play no role in statistical process control.

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Definitions:

Diseconomies of Scale

The phenomenon where, as a firm expands, its costs start increasing per unit of output, usually due to inefficiencies and management challenges that arise with size.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase and may decrease.

Natural Monopoly

A market structure where a single provider is more efficient in supplying the entire market with a product or service, due to high fixed or startup costs.