ABC Co Produces Only Gadgets, and XYZ Co

question 105

Multiple Choice

ABC Co. produces only gadgets, and XYZ Co. produces both gadgets and widgets. If ABC Co. produces gadgets at the same average total cost as XYZ Co., economies of:

• A) scope are present in ABC.
• B) scale are present in ABC.
• C) scale are not present in XYZ.
• D) scope are not present in XYZ.

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Definitions:

Liquidity Preference

A theory that suggests individuals prefer to have their resources in liquid form to meet immediate demands for funds.

Irving Fisher

A renowned American economist known for his contributions to the theory of interest and the Fisher Equation.

Price Level

A general average of the ongoing prices for goods and services within the economic sector.

Foreign-Currency Exchange

The process by which individuals and entities convert currency from one country's currency into another, understanding the dynamic exchange rates between currencies.