When a Firm Becomes So Large It Is Difficult to Coordinate

question 48

Multiple Choice

When a firm becomes so large it is difficult to coordinate and control, it is most likely that

• A) there are increasing marginal returns to increasing the firm's plant size.
• B) average total cost begins to fall.
• C) long-run average costs become negative.
• D) economies of scale have begun.
• E) diseconomies of scale have begun.

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Definitions:

Security Interest

A legal right or claim on assets granted to creditors to secure loan repayments, typically collateralized by the asset itself.

Perfected

Refers to the completion of all necessary legal steps or procedures to enforce rights, often used in the context of securing interests in collateral under law.

Possession

The act of having physical control over property or goods, with or without the right to own them.

Prescribed Hold-Back

A specific amount of money withheld from a contractor to ensure all obligations are met before full payment.