What Kind of Economies Come from Reductions in Cost Due

question 8

Multiple Choice

What kind of economies come from reductions in cost due to adoption of technology that has high fixed costs,but lower variable costs?

• A)Short-run economies of scale
• B)Short-run economies of scope
• C)Long-run economies of scale
• D)Long-run economies of scope
• E)Partially automated economies

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Definitions:

Selling

The process of promoting and transferring goods or services to a buyer in exchange for money.

Contribution Margin Ratio

The percentage of each dollar of sales that is available to apply to fixed costs and contribute to net income; calculated as unit contribution margin divided by unit selling price.

Unit Contribution Margin

The amount of revenue remaining per unit after deducting variable costs; calculated as unit selling price minus unit variable costs.

Unit Sales Price

The amount that a business charges for one unit of its product or service.