Spreading Fixed Costs Over a Large Volume Results in a Cost-Savings

question 16

Multiple Choice

Spreading fixed costs over a large volume results in a cost-savings phenomenon which is referred to as:

• A) volume synergies.
• B) economies of scale.
• C) captured savings.
• D) size effects.
• E) location economies.

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Definitions:

Credible Threat

A declaration or signal that one will take some negative action if conditions are not met, and it is believable and capable of being executed.

Oligopolistic Situation

A market condition where a few companies have the majority of market share and control over pricing.

Barriers to Entry

Factors that make it difficult for new firms to enter a market, often leading to reduced competition.

Dominant Strategies

Strategies in game theory that are preferable regardless of the opponent's actions, leading to a stable solution.