Which of the Following Statements Is True About Economies of Scale

question 17

Multiple Choice

Which of the following statements is true about economies of scale?

• A)Economies of scale lead to an increase in the average unit cost of a product.
• B)Attaining economies of scale increases a firm's profitability.
• C)The ability to spread variable costs over a large volume is a source of economies of scale.
• D)Economies of scale result due to the increase in the perceived value of a product.
• E)Economies of scale refer to cost savings that come from learning by doing.

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Definitions:

Unemployment

The failure to use all available economic resources to produce desired goods and services; the failure of the economy to fully employ its labor force.

Barter System

An economic system where goods or services are directly exchanged for other goods or services without using money.

Coincidence of Wants

A situation in a barter system where two parties each have a good or service that the other desires, allowing for a direct trade.

Division of Labor

The assignment of different parts of a manufacturing process or task to different individuals in order to improve efficiency and productivity.