Sources of External Economies of Scale Include

question 157

Multiple Choice

Sources of external economies of scale include

• A) larger plant size that allows the plant to take advantage of technology.
• B) larger firm size that results in volume discounts.
• C) larger industry size that `results in lower production costs.
• D) All of the above are correct.

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Definitions:

Fixed Costs

These are expenses that do not change with changes in the production volume or sales, such as rent, salaries, and insurance.

Net Income

The residue of all revenues and gains minus all expenses and losses for a period, often known as the bottom line.

Sales

The total amount of income generated by the selling of goods or services by a company during a certain period.

Manufacturing Costs

Refers to the total expenses incurred in the process of producing a product, including raw materials, labor, and overhead costs.