Suppose That Gigantic Company Is Increasing in Size

question 67

Multiple Choice

Suppose that Gigantic Company is increasing in size. As Gigantic Company grows, they are able to buy inputs in bulk, resulting in lower input prices. It is likely that continued growth will result in

• A) economies of scale.
• B) Gigantic Company achieving the minimum efficient scale of production.
• C) diseconomies of scale.
• D) increasing marginal returns.

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Definitions:

Future Rate

The anticipated interest rate or currency exchange rate applicable to financial transactions that will occur in the future.

Spot Exchange Rate

The present rate at which one can purchase or sell a currency for immediate transfer.

Forward Exchange Rate

A contractually fixed exchange rate for the future exchange of currencies at a specified date, used to hedge against foreign exchange risk.