Suppose That Gigantic Company Is Increasing in Size

question 103

Multiple Choice

Suppose that Gigantic Company is increasing in size. As Gigantic Company grows, coordination of work teams is becoming more difficult because of increased bureaucracy. 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:

Break-Even Point

The point at which costs or expenses and revenue are equal, resulting in no net loss or gain from a business or investment.

Variable Cost

Variable cost is the cost that changes in direct proportion to the volume of output or activity in production, services, or other cost-incurred activities.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Variable Cost

Costs that change in proportion to the level of activity or volume of production in a business.