In Order to Take Advantage of Economies of Scale,large Businesses

question 103

Multiple Choice

In order to take advantage of economies of scale,large businesses usually

• A) Devote resources to produce selected quantities of products
• B) Devote resources to produce large quantities of products
• C) Devote resources that are committed for only short time periods
• D) Devote resources that are able to quickly respond to a changing market

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Definitions:

Perfectly Elastic

A situation in economics where the quantity demanded or supplied changes by an infinite amount in response to any change in price; depicted by a horizontal line in price-quantity graphs.

Collusion

Cooperation among producers to limit production and raise prices so as to raise one another’s profits.

Barriers To Entry

Barriers to entry are obstacles that make it difficult for new competitors to enter an industry, including high initial investment costs, strict regulations, or strong brand loyalty among existing customers.

Perfect Competition

A market structure characterized by a large number of small firms, a homogeneous product, free entry and exit, and perfect information.