When a Firm Becomes So Large It Is Difficult to Coordinate

question 152

Multiple Choice

When a firm becomes so large it is difficult to coordinate and control,it is most likely that

• A) economies of scale have begun.
• B) diseconomies of scale have begun.
• C) average total cost begins to fall.
• D) long-run average costs become negative.
• E) there is increasing marginal returns to increasing the firm's plant size.

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Definitions:

Synergistic Gains

The enhanced value created by the combination of two or more companies or assets, beyond what they could achieve independently.

Acquisition

The process of obtaining control of another company or business entity through purchase or merger.

Tax Reductions

Financial strategies or government policies aimed at decreasing the amount of taxes owed by individuals or corporations.

Synergistic Benefits

The additional value or performance gains created by combining two or more companies, products, or assets, beyond what could be achieved individually.