Amazon, a Leading Online Retailer, Began by Offering Books for Sale

question 19

Multiple Choice

Amazon, a leading online retailer, began by offering books for sale online. This was quickly expanded into music and movies. Currently, Amazon also sells toys, electronics, health and beauty and jewellery items. In other words, this represents _____.

• A) economies of scope
• B) horizontal growth by merger
• C) a hold-up problem
• D) vertical disintegration

---

Definitions:

TC

An abbreviation for Total Cost, it quantifies the overall expense incurred in the production of goods or services, encompassing both fixed and variable costs.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm's output expands, often due to complexities and inefficiencies at larger scales.

Long-Run Average Total Cost

The cost per unit of output incurred when all factors of production, including capital, are variable, indicating the lowest possible cost of production for each level of output when the scale of operation is changed.

Total Variable Cost

The sum of all costs that vary directly with the level of production or output, including costs for materials, labor, and energy.