Economies of Scale Can Be Caused by

question 43

Multiple Choice

Economies of scale can be caused by

• A)all of the following
• B)short-run increases in marginal productivity
• C)the use of larger, more specialized machines
• D)higher information costs as a firm expands
• E)bureaucratic red tape as a firm expands

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Definitions:

Corporation

A legal entity that is separate from its owners, with the ability to own assets, incur liabilities, and conduct business.

Unlimited Liability

A legal structure in which the owners are personally liable for all the debts and liabilities of the business, without any limit.

General Partnership

A business arrangement where two or more individuals agree to share in all assets, profits, and financial and legal liabilities of a jointly-owned business.

Corporation

A legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit. Corporations can enter contracts, sue and be sued, and pay taxes apart from their owners.