Which of the Following Is Not an Example of Economies

question 153

Multiple Choice

Which of the following is not an example of economies of scale?

• A) To produce tap water, the water companies had to invest in a huge network of water pipes.
• B) Supermarkets can benefit from economies of scale, because they can buy food in bulk and get lower average costs.
• C) Producing oil from tar sands in Alberta can generate profits only when the world price of a barrel of oil is high.
• D) A bigger financial firm gets a lower rate of interest when borrowing.

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Definitions:

Unbundling

The process of separating a product or service into individual components which can be sold separately.

Pricing Strategy

The method companies use to price their products or services, considering factors like market demand, competition, and cost of production.

Break-Even Analysis

A financial calculation to determine the point at which revenue received equals the costs associated with receiving the revenue, indicating no net loss or gain.

Price Sensitivity

The degree to which the price of a product or service affects consumers' purchasing decisions or demand for the product.