What Is the Best Divisional Structure When a Few Major

question 111

Multiple Choice

What is the best divisional structure when a few major customers are of paramount importance and many different services are provided to these customers?

• A) By geographic area
• B) By customer
• C) By product
• D) By process
• E) By cost

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Definitions:

Diminishing Returns

A principle stating that if one factor of production is increased while others are held constant, the output per unit of the variable factor will eventually decrease.

ATC

An abbreviation for Average Total Cost, a financial metric calculated by dividing the total cost by the quantity of output produced.

MC

Often referred to as Marginal Cost, it is the increase in total cost that arises from an extra unit of production.

Inputs

Resources used in the production process to produce goods or services.