Asked by Jenna Kenneally on Jul 14, 2024
Verified
A movement from A to C in Figure 7.6.1. may represent:
A) economies of scale.
B) diseconomies of scale.
C) learning.
D) economies of scope.
E) diseconomies of scope.
Economies of Scale
Businesses gain financial benefits from their size of operation, as the cost for each unit of output typically reduces with the expansion of scale.
Economies of Scope
Cost advantages that enterprises obtain due to the efficient management of diverse business activities that enable them to share resources and capabilities across different products or segments.
- Master the idea of economies of scope and its contrast with economies of scale.
- Differentiate the roles of learning curves and economies of scale in influencing the costs of production processes.
Verified Answer
NS
Nicholas SheehanJul 14, 2024
Final Answer :
C
Explanation :
A movement from A to C represents learning, as the firm becomes more efficient in its operations with experience and practice. Economies of scale and economies of scope represent decreases in average cost with increased production and diversification, respectively. Diseconomies of scale and diseconomies of scope represent increases in average cost with increased production and diversification, respectively. None of these concepts are represented by a movement from A to C.
Learning Objectives
- Master the idea of economies of scope and its contrast with economies of scale.
- Differentiate the roles of learning curves and economies of scale in influencing the costs of production processes.