Which of the Following Is a Suitable Description of the Term

question 49

Multiple Choice

Which of the following is a suitable description of the term 'economies of scope'?

• A) The use of several inputs to produce one common output.
• B) The ability to generate cost savings by producing more than one output with the same inputs.
• C) The ability to lower average operating costs by expanding the number of outputs.
• D) The ability to lower average operating costs by lowering the number of outputs.

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Definitions:

Unit Fixed Costs

Unit Fixed Costs are the costs that do not change with the volume of production and are allocated per unit based on the total production quantity.

Total Variable Cost

Charges that fluctuate in direct relation to the volume of production or output.

Merchandising Company

A Merchandising Company is a business that purchases finished products and sells them at a profit, without altering the products themselves.

Cost Structure

The composition of a company’s costs, including fixed and variable costs, which impacts its profitability and pricing strategy.