​Tulip World Exports Flowers Around the Globe,using Standard Worldwide Prices

question 158

Multiple Choice

​Tulip World exports flowers around the globe,using standard worldwide prices.But its marketing director realizes that the success of this pricing strategy could be undermined by certain market changes.Choose the change(s) he has in mind.

• A)​Domestic tulip suppliers undercut Tulip World's prices.
• B)​New trade restrictions are imposed in some of the countries where the firm does business.
• C)​Foreign marketing costs rise significantly.
• D)​Tulip World's prices no longer reflect its unit export costs.
• E)​Tulip World switches to a new distribution system.

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Definitions:

Diseconomies of Scale

A situation where, as a firm increases its production, the costs per unit increase.

Constant Returns to Scale

A situation in which increasing the amount of inputs results in a proportional increase in outputs.

Diseconomies of Scale

A situation in which production costs increase as a firm’s output increases, leading to decreased efficiency.

Decreasing Returns to Scale

Decreasing Returns to Scale occurs when a firm increases all inputs by a certain proportion, but the output increases by a smaller proportion, indicating reduced efficiency.