Which of the Following Best Describes Economies of Scope

question 26

Multiple Choice

Which of the following best describes economies of scope?

• A)The average cost declines as output increases
• B)The average cost increases as output increases
• C)The average cost remains constant as output increases
• D)Savings are achieved when a firm produces a wider variety of goods
• E)Savings are achieved when a firm produces a decreased variety of goods

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Definitions:

Total Asset Turnover

A metric that evaluates how effectively a company utilizes its assets to produce sales income.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the open market.

Fixed Assets

Long-term tangible assets used in the operation of a business that are not intended to be sold within a year, such as buildings, machinery, and equipment.

Equity Capital

The amount of money that is invested into a business by its owners in exchange for a share of ownership.