Economies of Scale Refer to the Fact That as The

question 30

Multiple Choice

Economies of scale refer to the fact that as the:

• A) Quantity of product produced in a given time period increases, the cost of manufacturing each unit increases
• B) Quantity of product produced in a given time period increases, the cost of manufacturing each unit remains constant
• C) Quantity of product produced in a given time period increases, the cost of manufacturing each unit decreases
• D) Quantity of product produced in a given time period decreases, the cost of manufacturing each unit decreases

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Definitions:

Production Costs

The total expense incurred in the manufacture of a product, including labor, materials, and overhead.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting overhead, payroll, taxation, and interest payments.

Net Profit

The remaining income after all expenses, taxes, and costs have been subtracted from total revenue.

Value Chain

A series of activities by a firm that adds value to its products or services from conception to delivery.