Figure 12-5 -Refer to Figure 12-5.Which of the Curves Is Most Likely

question 337

Multiple Choice

Figure 12-5
-Refer to Figure 12-5.Which of the curves is most likely to represent average fixed cost?

• A) A
• B) B
• C) C
• D) D

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Definitions:

Economies of Scale

The cost advantage achieved when increasing the scale of production leads to a reduction in the average cost of each unit produced.

Diseconomies of Scale

The phenomenon where companies experience an increase in average costs per unit when production is scaled up beyond a certain point.

Specialized Activities

Tasks or operations that require specific expertise or skills, often focused on a particular aspect of a business or industry.

Economies of Scale

The cost advantage that arises with increased output of a product, resulting from efficiencies in production processes.