16-65 Which of the Following Implies That Small FIs Are

question 104

Multiple Choice

16-65 Which of the following implies that small FIs are more cost efficient than large FIs,and that in a freely competitive environment for financial services,small FIs may outperform their larger counterparts?

• A)Economies of scale.
• B)Diseconomies of scale.
• C)Economies of scope.
• D)Diseconomies of scope.
• E)Constant returns to scale.

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Definitions:

Diminishing Marginal Utility

The economic principle stating that as a person increases consumption of a product, there is a decline in the additional satisfaction or utility that person derives from consuming one more unit of the product.

Increasing Opportunity Costs

The principle that the cost of forgoing the next best alternative increases as one allocates more resources to a certain activity.

Value Losses

Decreases in the worth or market value of an asset over time.

Cash Gift-Giving

The practice of giving money as a present to friends or family members on special occasions or celebrations.