Diseconomies of Scale Arise Primarily Because

question 174

Multiple Choice

Diseconomies of scale arise primarily because

• A)the short-run average total cost curve rises when marginal product is increasing.
• B)of the difficulties involved in managing and coordinating a large business enterprise.
• C)firms must be large both absolutely and relative to the market to employ the most efficient productive techniques available.
• D)beyond some point, marginal product declines as additional units of a variable resource (labor)are added to a fixed resource (capital).

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Definitions:

Noncash Investing

A type of investing activity that involves transactions not involving cash, such as property or stock trades.

Financing Activity

Transactions related to raising or repaying capital, including debt, equity, and dividends payments, reported in the cash flow statement.

Investing Activity

Transactions involving the purchase or sale of long-term assets and investments, not relating directly to the entity’s primary business activities.

Cash Equivalent

Short-term, highly liquid investments that can be readily converted to cash with insignificant risk of changes in value.