Antonio's Small Pasta Firm Is Considering Exporting Its Products

question 27

Multiple Choice

Antonio's small pasta firm is considering exporting its products.A Canadian grocery store chain with its corporate headquarters in Quebec has approached him.Which question would need to be answered in relation to the pasta company's financial capacity objectives?

• A)How are the initial expenses of expanding to Canada going to be covered?
• B)What international expertise does Antonio have,specifically does he speak French?
• C)Why does Antonio want to export to Canada?
• D)Will Canadian sales hurt USA sales?

---

Definitions:

Economies of Scale

The economic benefits gained by companies because of their large scale of operation, which typically results in a lower cost per unit of output as the scale increases.

Average Fixed Costs

The total fixed costs associated with production (costs that do not change with output) divided by the quantity of output produced.

Output Increases

A rise in the quantity of goods or services produced by a company or economy.

Law of Diminishing Returns

The principle that as the level of investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain constant.