A Car Leasing Company That Expands Its Size by Buying

question 35

Multiple Choice

A car leasing company that expands its size by buying its competitors may run the risk of increasing production cost per unit due to:

• A) diseconomies of scale.
• B) economies of scale.
• C) diminishing returns.
• D) greater use of large-volume purchases.

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Definitions:

Treasury Bills

Short-term government securities with maturities ranging from a few days to 52 weeks, issued at a discount to face value.

Inflation

A measure of the rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Efficient Capital Market

A market where all relevant information is fully and immediately reflected in securities prices, ensuring that securities are always fairly priced.

Security Prices

The market value or price at which securities, such as stocks or bonds, are bought and sold.