The Smallest Level of Output at Which All Economies of Scale

question 5

Multiple Choice

The smallest level of output at which all economies of scale have been fully utilized is:

• A) constant returns to scale.
• B) economies of scale.
• C) diseconomies of scale.
• D) minimum efficient scales.

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Definitions:

Equivalent Units

A measure used in accounting to express the amount of work done by manufacturers in terms of fully completed output units.

Materials

Items and substances used in the production of goods, including raw materials, components, and parts.

Weighted-Average Method

A cost accounting method that calculates the cost of equivalent units of production by weighting the cost of units transferred out and the cost of the ending work in process inventory.

Processing Department

A production department specialized in a particular process or stage in the manufacturing process, where costs are accumulated.