Which of the Following Provides the Best Explanation for Diseconomies

question 33

Multiple Choice

Which of the following provides the best explanation for diseconomies of scale?

• A) the firm is too small to take advantage of specialization.
• B) large management structures may be bureaucratic and inefficient.
• C) if there are too many employees, the work place becomes crowded and people become less productive.
• D) average fixed costs are rising.

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Definitions:

Net Realizable Value

The estimated selling price of an item in the ordinary course of business minus any costs associated with the sale or disposal of the item.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's accounts receivable that may not be collectible.

Gross Accounts Receivable

The total amount owed by customers to a business for goods or services provided without deducting any allowance for doubtful accounts.

Contra-Revenue Account

An account that decreases the gross amount of revenue reported on the financial statements, such as sales returns, discounts, and allowances.