The Major Problem with the Sales-Productivity Ratio Method of Assigning

question 25

Multiple Choice

The major problem with the sales-productivity ratio method of assigning space is that _____.

• A)storability may not be considered
• B)too much space may be assigned for merchandise space
• C)too little space may be assigned for merchandise space
• D)an inadequate selection of merchandise may be stocked

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Definitions:

Diseconomies of Scale

The phenomenon where production costs per unit increase as the volume of output increases.

Constant Returns to Scale

A situation in economics where increasing the inputs in production proportionately increases the output.

Constant Returns to Scale

The situation where an increase in all inputs by a certain factor leads to an increase in output by the same factor, showing linear scalability in production.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm's output expands, often due to inefficiencies that arise from becoming too large.