The Savings That a Large Company Can Enjoy from Producing

question 47

Multiple Choice

The savings that a large company can enjoy from producing goods in high volume,that are not available to a small company are called:

• A)economies of scale.
• B)horizontal integration.
• C)vertical integration.
• D)economies of scope.

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Definitions:

Fixed Cost

An expense that does not change with the level of production or sales over a short period.

Sales Commissions

The payment given to sales employees based on the amount of sales they generate, typically a percentage of the sale price.

Sales Volume

The amount of goods or services a company sells over a certain time frame.

Variable Costs

Costs that vary directly with the level of output or production, such as materials and labor directly involved in manufacturing.