What Kind of Economies Come from Reductions in Average Costs

question 4

Multiple Choice

What kind of economies come from reductions in average costs due to increases in capacity utilization?

• 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)Fully automated economies

---

Definitions:

Gross Profit

Revenue from sales or services minus the cost of goods sold, representing the preliminary profit figure before deducting operating expenses.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Net Sales

Total sales for the time period minus sales returned and adjustments made during the same time.

Percentage of Net Change

The ratio or fraction, expressed as a percentage, that represents the difference between the old value and the new value divided by the old value, often used to measure growth or decline.