When Economies of Scale Exist,an Increase in the Level of Output

question 113

Multiple Choice

When economies of scale exist,an increase in the level of output will lead to:

• A) a decrease in cost per unit.
• B) an increase in cost per unit.
• C) a decrease in total cost.
• D) both a. and c. above

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Definitions:

Business Segments

Divisions within a company that operate in different types of markets or industries, each with its own specific financial and operational strategies.

Traceable Fixed Costs

Fixed expenses that can be directly linked to a specific business segment or product.

Common Fixed Costs

Costs that are shared among multiple product lines or departments within an organization and do not change with the volume of production.

Segment Performance

An analysis of a specific part of a company, such as a division or product line, to evaluate its contribution to the overall performance of the business.