When Diseconomies of Scale Occur

question 274

Multiple Choice

When diseconomies of scale occur,

• A)the long-run average total cost curve falls.
• B)marginal cost intersects average total cost.
• C)the long-run average total cost curve rises.
• D)average fixed costs will rise.

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Definitions:

Target Costing

A pricing strategy in which the selling price of a product is determined first, and then the manufacturing cost is managed to meet that selling price.

Mark-up

The amount added to the cost price of goods to cover overhead and profit.

Eliminate

The process of removing or getting rid of something.

Contribution Margin

The amount remaining from sales revenue after all variable costs have been deducted, indicating how much revenue is contributing to covering fixed costs and generating profit.