Which of the Following Is NOT a Reason a Firm

question 10

Multiple Choice

Which of the following is NOT a reason a firm might experience economies of scale?

• A) specialization
• B) dimensional factors
• C) increasing long-run average costs
• D) more productive equipment

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Definitions:

Cost-Output Elasticity

The responsiveness of the cost of producing a good or service to changes in the level of output.

Diseconomies of Scale

A situation where a business grows so large that the costs per unit increase. It occurs when economies of scale no longer function for a firm.

Production Function

An equation or model that describes the relationship between inputs used in production and the output produced.

Diminishing Returns

The principle stating that if one factor of production is increased while others remain constant, the overall returns will incrementally decrease after a certain point, leading to reduced efficiency.