If Economies of Scale Are Relatively Important in an Industry

question 160

Multiple Choice

If economies of scale are relatively important in an industry, the typical firm's

• A)marginal cost curve will decline continuously until it reaches minimum efficient scale.
• B)long-run average cost curve will begin rising before it reaches minimum efficient scale.
• C)long-run average cost curve will reach a minimum at a level of output that leaves room for a large number of firms to enter the industry.
• D)long-run average cost curve will reach a minimum at a level of output that is a relatively large fraction of total industry sales.

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Definitions:

Budgeted Income Statement

A financial statement that projects the income and expenses for a future period, helping businesses plan for profitability.

Sales Budget

An estimate of future sales, often broken down into both volume and value, forming the basis for production planning and marketing strategies.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including labor and materials.

Direct Labor Cost

The wages of factory workers who are directly involved in converting materials into a finished product.