When Economies of Scale Are Large,firms Can Reduce Their Average

question 45

Multiple Choice

When economies of scale are large,firms can reduce their average total cost by:

• A) selling off their subsidiaries.
• B) merging into even larger firms.
• C) eliminating the bureaucratic costs.
• D) hiring professional managers.

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Definitions:

Interest

The cost of using money for a period of time.

Convertible Bonds

These are corporate bonds that holders can convert into a predetermined number of shares of the issuing company's stock, combining features of both debt and equity.

Specified Exchange Rate

A predetermined rate at which two currencies will be exchanged in a financial transaction.