Which of the Following Is an Example of an Advantage

question 18

Multiple Choice

Which of the following is an example of an advantage that an established firm has over a new firm?

• A) Companies face a learning curve when they develop any product or service.
• B) Business depends a great deal on reputation.
• C) Many businesses face economies of scale.
• D) New companies often find it difficult to compete with established companies because they lack complementary assets.
• E) All of the above

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Definitions:

Variable Cost

Costs that change in direct proportion to changes in the levels of production or sales activities, such as materials and labor costs.

Relevant Range

The range of activity or volume over which the assumed cost behavior is valid, beyond which cost patterns and relationships may change.

Average Costs

The total costs divided by the number of units produced, giving a per unit cost average.

Total Variable Cost

The sum of all costs that vary with output level, including materials, labor, and other costs that increase with production volume.