Understanding Economies of Scale

What is the primary focus of the class mentioned in the introduction?

• Business ethics

• Business growth and economies of scale

• Marketing strategies

• Financial accounting

What are economies of scale?

• When average costs increase as output increases

• When average costs decrease as output increases

• When average costs remain constant as output increases

• When average costs fluctuate unpredictably

What are diseconomies of scale?

• When average costs decrease as output increases

• When average costs increase as output increases

• When average costs remain constant as output increases

• When average costs fluctuate unpredictably

According to the introduction, does a business need to be large to be successful?

• Yes, it must be large

• No, it does not have to be large

• It depends on the industry

• Only if it wants to be a multinational corporation

What is the relationship between average costs and output in economies of scale?

• Average costs increase as output decreases

• Average costs decrease as output increases

• Average costs remain constant as output increases

• Average costs increase as output increases

What is the relationship between average costs and output in diseconomies of scale?

• Average costs decrease as output increases

• Average costs increase as output increases

• Average costs remain constant as output increases

• Average costs decrease as output decreases

Which of the following is NOT a method of external growth?

• Mergers

• Acquisitions

• Internal expansion

• Strategic alliances

What is the main objective of learning about economies and diseconomies of scale?

• To understand financial statements

• To distinguish between them and understand their implications

• To learn about marketing strategies

• To understand consumer behaviour

Which of the following is a potential benefit of economies of scale?

• Increased average costs

• Reduced average costs

• Increased competition

• Decreased market share

Which of the following is a potential drawback of diseconomies of scale?

• Decreased average costs

• Increased average costs

• Increased efficiency

• Decreased output