Which of the Following Statements Accurately Brings Out the Difference

question 42

Multiple Choice

Which of the following statements accurately brings out the difference between economies of scale and economies of scope?

• A) Economies of scale refer to the decreases in per-unit cost with decreases in output, whereas economies of scope refer to the increases in per-unit cost with increases in output.
• B) Economies of scale result in decreasing returns to scale, and economies of scope result in constant returns to scale.
• C) Economies of scope are the savings that come from producing two or more outputs from the same resources, whereas economies of scale are decreases in per-unit cost with increases in output.
• D) Economies of scope are realized when a firm operates at the minimum efficient scale, whereas economies of scale are realized when the firm operates beyond the minimum efficient scale.

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Definitions:

Non-Adjusting Event

An event that occurs after the reporting period that does not necessitate adjustments to the financial statements because it does not provide new information about conditions at the end of the reporting period.

Doubtful Debts Expense

An accounting concept referring to the provision a company makes to account for amounts it expects will not be collected from debtors.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Long-Service Leave

An employee benefit offering paid leave to those who have been employed by the same company for a long period of time, typically recognized in countries like Australia.