Which of the Following Is an Example of Economies of Scale

question 10

Multiple Choice

Which of the following is an example of economies of scale?

• A) As the computer industry has expanded, the number of professionally trained computer programmers has also increased, which has caused the salaries of computer programmers to increase.
• B) To attract firms to locate in its state, the state government reduced the tax rate that businesses must pay on its profits, thus lowering the costs to firms who locate in the state.
• C) A firm increases in size and is therefore able to lower its health insurance costs because as the size of the insured group increases, the premium per person decreases substantially.
• D) As the demand for calculators increased, the price of calculators actually fell.

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Definitions:

Expected Exit Value

The anticipated amount to be received from an investment at the point of exit, such as selling an asset or closing a position.

Fair Value

An estimate of the market value of an asset or liability, based on current market prices.

Probable Future Sacrifices

The expected relinquishment of assets as a result of obligations.