The Trust That a Firm Has Built Between Itself and Its

question 132

True/False

The trust that a firm has built between itself and its suppliers is an example of a costly-to-imitate capability that other firms cannot easily develop.

---

Definitions:

Constant Returns to Scale

The situation where an increase in all inputs by a certain factor leads to an increase in output by the same factor, showing linear scalability in production.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm's output expands, often due to inefficiencies that arise from becoming too large.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Average Total Cost

The total cost of production divided by the quantity of output produced; it includes all variable and fixed costs.