One Reason That Firms Will Experience Increasing Returns to Scale

question 10

Multiple Choice

One reason that firms will experience increasing returns to scale is

• A) The law of diminishing marginal returns
• B) The specialization of inputs as scale increases
• C) There is some fixed input that isn't being taken into consideration
• D) Large firms may be difficult to manage effectively

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Definitions:

Account Receivable

Funds that are owed to a company by clients or customers who have received goods or services on credit.

Total Liabilities

Represents the combined debts and obligations that a company owes to outside parties at a specific point in time.

Asset

Any resource owned or controlled by a business or an individual that is expected to produce future economic value.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing ownership equity spread among stockholders.