The Ability to Use One Resource to Provide Different Products

question 127

Multiple Choice

The ability to use one resource to provide different products and services is

• A)economies of scale.
• B)economies of scope.
• C)diversification.
• D)vertical integration.

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Definitions:

Law of Increasing Costs

An economic principle stating that as the production of one good increases, the opportunity cost of producing an additional unit of this good also increases, assuming all resources are fully utilized.

Capacity Utilization Rate

A measure of how efficiently a firm or economy is using its productive capacity, often expressed as a percentage of total potential output.

Full Capacity

The maximum level of output that a company can produce and supply under normal conditions.

Production Possibilities Curve

A graphical representation that shows the maximum quantity of goods and services that a society can produce given its resource and technology constraints.