Which of the Following Is a Question That Should Not

question 69

Multiple Choice

Which of the following is a question that should not be sidestepped when buying a business?

• A)Where should the business be located?
• B)What types of customers does this store attract?
• C)What pricing strategy should the firm use?
• D)Are there hidden problems that exist in the operation?

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Definitions:

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm or production process scales up, contrary to economies of scale where costs decrease.

Boeing

An American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles worldwide.

Law of Diminishing Returns

An economic principle stating that adding more of one factor of production, while holding others constant, will at some point yield lower per-unit returns.

Fixed Factor

An input in the production process that cannot be changed in the short term, such as premises or machinery.