Economies of Scale Exist

question 10

Multiple Choice

Economies of scale exist

• A) only for monopolists.
• B) when long-run average total costs increase.
• C) when long-run average total costs decrease.
• D) when long-run average total costs are constant.
• E) when governments create barriers to entry.

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Definitions:

Target Costing

An accounting strategy that sets prices based on market conditions and then manages costs to meet those prices, aiming for profitability.

Target Selling Price

The price a company aims to sell its product for, determined by market conditions, cost structure, and profit margin goals.

New Product

A good or service that has recently been developed and introduced to the market, offering new features, benefits, or improvements over previous versions.

Target Cost

The maximum amount that can be spent on a product while still earning the required profit margin, based on market-driven pricing.