Sematech Is a Producer of Computer Chips

question 40

Multiple Choice

Sematech is a producer of computer chips. To gain an advantage over other computer chip makers, Sematech focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of Sematech's competitors have begun to reduce the company's competitive advantage. In response to this threat, Sematech has decided to add production capacity in an effort to lower costs.
-If Sematech's expansion plans did not produce the desired cost savings but the company decided to continue production expansion in an effort to capture cost reductions, this would be an example of

• A) economies of scale.
• B) escalation of commitment.
• C) diseconomies of scale.
• D) managerial diseconomies.

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Definitions:

OID Instruments

Debt instruments issued at a discount from their face value, with the difference treated as interest for tax purposes.

Interest Income

Interest Income is the earnings an individual receives from depositing funds in interest-bearing accounts, such as savings accounts or investments in bonds.

Taxpayers

Individuals or entities that are obligated to pay taxes to a federal, state, or local government.

Employee Discounts

Reduced prices offered to workers of a company for its products or services.