If Quick Auto Service Increases the Size of Its Shop

question 128

Multiple Choice

If Quick Auto Service increases the size of its shop, enabling it to purchase cost-saving capital equipment so that the cost of servicing a car falls, this would be an example of

• A) economies of scope.
• B) economies of scale.
• C) monitoring.
• D) increasing transactions costs.

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Definitions:

Apparent Authority

A situation where a reasonable person would understand that an agent had authority to act, even if the agent did not have actual authority.

Limited Partnership

A partnership consisting of one or more general partners who manage the business and are personally liable, and one or more limited partners whose liability is restricted to their investment.

Transferable Rights

Rights or privileges that can be transferred or assigned from one party to another, either freely or under certain conditions.

LLLP

A Limited Liability Limited Partnership, a form of business organization that combines elements of a partnership and limited liability protections.