Which of the Following Is a Disadvantage of Decentralization

question 23

Multiple Choice

Which of the following is a disadvantage of decentralization?

• A)Develops managerial expertise
• B)Managers have specialized knowledge
• C)Potential duplication of resources
• D)Allows top managers to focus on strategic issues

---

Definitions:

Average Total Cost

The total cost of production divided by the quantity produced, taking into account both fixed and variable costs.

Excess Capacity

The situation where a company is producing less than its full potential output due to lack of demand or other constraints.

Efficient Scale

The level of production at which a firm achieves the lowest average total cost, with economies of scale fully exploited.

Business-Stealing Externality

Negative impacts on existing firms due to entry of new competitors, which can steal customers and reduce profits.