Which of the Following Is Most Likely to Be an Example

question 19

Multiple Choice

Which of the following is most likely to be an example of economies of scale?

• A) The per-unit costs on Excel Publishing Company's manuals fall because it adopted a new technology after receiving a large order from the government.
• B) Alpha-Beta Inc. raised its price by 10 percent after a 5 percent increase in production costs.
• C) Widget Manufacturing doubled its production by opening a new plant that was identical to its old plant.
• D) The XYZ Co. increased production 25 percent after a 30 percent increase in all inputs.

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Definitions:

Full Capacity

The highest amount of production a business can maintain for an extended time without needing to raise its fixed expenses.

Capacity

The maximum level of output that a company can sustain to make a product or provide a service, taking into account current resources and facilities.

Short Run

A time period in economics during which at least one input is fixed while others may be variable, affecting the production and costs of a business.

Long Run

In economics, the long run refers to a period in which all inputs or factors of production can be varied and no costs are fixed.