Costs, break even and location decision

Total costs =

• Fixed costs + Variable costs

• Fixed costs and variable costs combined.

• The total amount of fixed costs and variable costs put together.

• All of the above

Define economies of scale

• The factors that lead to a reduction in average costs as a business increases in size.

• The factors that lead to an increase in average costs as a business increases in size.

• None of the above

Which of the following is not an economies of scale?

• Marketing economies

• Resource economies

• Managerial economies

Break even is the point where

• Total revenue is higher than total costs.

• Total costs is higher than total revenue

• Total revenue is equal to total costs

• Total costs is equal to average costs..

"Large firms use often use flow production methods. These apply to the principle of division of labor. Specialist machines are used to produce items in a continuous flow with workers responsible for just one stage of the production."

The above description belongs to:

• Managerial economies

• Marketing economies

• Purchasing economies

• Technical economies

What are reason for diseconomies of scale to occur?

• poor communication

• Low morale

• Slow decision making

• All of the above

Which of the following is not a use of break even charts?

• shows break even output

• Shows safety margin

• Can be used to check quality

• Can be useful in decision making

"When businesses buy large numbers of components they are able to gain discounts for buying in bulk"

The above description is of

• Financial economies

• Purchasing economies

• Technical economies

Which of the following is not a quantitative factor affecting location decisions?

• Legal controls

• Cost of site

• Transport costs

Which of the following is a quantitative factor affecting business location decision?

• Issues

• Ethical

• Size of site