What Kind of Economies Come from Reductions in Average Costs

question 4

Multiple Choice

What kind of economies come from reductions in average costs due to increases in capacity utilization?

• A)Short-run economies of scale
• B)Short-run economies of scope
• C)Long-run economies of scale
• D)Long-run economies of scope
• E)Fully automated economies

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Definitions:

Vacation Pay Expense

Represents the cost to an employer for employees' earned but not yet taken vacation time, recognized as a liability.

Operations Year

The 12-month period used by businesses to measure financial and operational performance, often aligning with the fiscal year but not necessarily the calendar year.

Defined Contribution Plan

A pension plan in which the contributions into the plan are defined but the employee’s pension may vary depending on investment performance.

Annual Pension Benefit

The amount of money an individual receives from a retirement plan each year after retirement.