Which of the Following Is an Example of Economies of Scale

question 343

Multiple Choice

Which of the following is an example of economies of scale?

• A) As the computer industry has expanded, the number of professionally trained computer programmers has also increased, which has caused the salaries of computer programmers to increase.
• B) To attract firms to locate in its state, the state government reduced the tax rate that businesses must pay on its profits, thus lowering the costs to firms who locate in the state.
• C) A firm increases in size and is therefore able to lower its health insurance costs because as the size of the group insured increases, the premium per person decreases substantially.
• D) As the demand for calculators increased, the price of calculators actually fell.

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Definitions:

Undisclosed Limitations

Restrictions or constraints on an agreement or condition that are not made known to all parties involved.

Undisclosed Principal

A principal whose identity is unknown by a third party, and that party has no knowledge that the agent is acting for a principal at the time the agent and the third party form a contract.

Tortious Act

A wrongful act or infringement of a right leading to legal liability, not arising from a contract or statute.

Estopped

A legal principle that prevents someone from arguing something contrary to a claim previously made or accepted in court.