Economies of Scale Exist as a Firm Increases Its Size

question 94

Multiple Choice

Economies of scale exist as a firm increases its size in the long run because of all of the following except

• A)the firm can afford more sophisticated technology in production.
• B)labour and management can specialize even further in their tasks.
• C)as a larger input buyer, the firm can purchase inputs at a lower per unit cost.
• D)as a firm expands its production, its profit margin per-unit of output increases.

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Definitions:

Euro

The official currency of 19 of the 27 European Union countries, which together make up the Eurozone.

Buying Power

The capacity of an individual or company to purchase goods and services, often related to the amount of money available.

CPI

A metric known as the Consumer Price Index evaluates the overall weighted pricing of a range of consumer items and services, covering areas such as healthcare, food, and transportation.

Raise

An increase in salary or wages.