Which of the Following Physical Relationships Might Generate Economies of Scale

question 169

Multiple Choice

Which of the following physical relationships might generate economies of scale?

• A) Proportionally larger pipes can transport more than a proportional increase in oil.
• B) Larger equipment tends to weigh more and use more fuel on a per-unit-of-output basis.
• C) Each lift truck requires one lift truck driver.
• D) A doubling of all inputs leads to a doubling of output.

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Definitions:

Owner's Drawings

The withdrawal of business assets by the owner for personal use, which reduces the equity of the owner in the business.

Gross Profit

The difference between revenue and the cost of goods sold before accounting for certain expenses.

Operating Expenses

Regular costs associated with operating a business, such as rent, utilities, and payroll.

Net Income

The final amount of profit a company declares after reducing its total revenue by the incurred taxes and expenses.