A Product Line at Coca-Cola (Such as the Diet Coke

question 10

Multiple Choice

A product line at Coca-Cola (such as the Diet Coke product line) is most likely treated as a(n) :

• A)cost center.
• B)investment center.
• C)profit center.
• D)revenue center.

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Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to their size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale.

Diseconomies of Scale

A condition when a company or business grows so large that the costs per unit increase, leading to reduced efficiency.

Constant Returns to Scale

A situation in production where an increase in the quantity of inputs leads to a proportional increase in the quantity of output.

Economic Cost

A payment that must be made to obtain and retain the services of a resource; the income a firm must provide to a resource supplier to attract the resource away from an alternative use; equal to the quantity of other products that cannot be produced when resources are instead used to make a particular product.