Exam 2: Economies of Scale and Scope

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$.06 per potential c...

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A) The point on an average cost curve where the cost per unit begins to decline more rapidly
B) The minimum point on a U-shaped average cost curve
C) The minimum level of production at a plant for it to be considered profitable
D) The level of production for a small sized plant
E) The threshold at which capacity is constraining for a firm's production

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B

A) Increased compensation
B) Consolidation of other senior executives
C) Shielding against risk
D) Political power
E) Social prominence

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A) Market for corporate control
B) SEC
C) Corporate board
D) Corporate governance
E) CEO

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A) Encourages individuality among workers within the organization
B) Keeps unionized workers happy
C) Allows workers to acquire skills they can then "shop around"
D) Ensures worker knowledge is tied to current employment
E) Increases complexity and creativity in the organization

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A) .6
B) .7
C) .8
D) .9
E) 1.0

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A) The cost to manufacture a special die to make an aircraft fuselage
B) The cost of developing graphics software to facilitate video game development
C) The cost of a one-week training program preceding the implementation of a specific management initiative
D) The time and expense required to set up a textbook before printing it
E) The cost of administrative expenses

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A) The average cost declines as output increases
B) The average cost increases as output increases
C) The average cost remains constant as output increases
D) Savings are achieved when a firm produces a wider variety of goods
E) Savings are achieved when a firm produces a decreased variety of goods

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A) Short-run economies of scale
B) Short-run economies of scope
C) Long-run economies of scale
D) Long-run economies of scope
E) Partially automated economies

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C

A) Increases effectiveness of advertising due to a greater presence
B) Increases effectiveness of advertising due to national advertising
C) Increases effectiveness of advertising due to offering a broad product line under one name
D) Increased cost effectiveness through purchasing as a cooperative
E) Increased cost effectiveness through bulk purchasing

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C

A) Use of internal capital markets
B) Economies of scale and scope
C) Economizing on transaction costs
D) Diversifying shareholder portfolios
E) Identifying undervalued firms

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A) Short-run economies of scale
B) Short-run economies of scope
C) Long-run economies of scale
D) Long-run economies of scope
E) Fully automated economies

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A) Control systems rewarding/penalizing division managers based on business unit objective
B) Economies of scale and scope
C) Economizing on transaction costs
D) Diversifying shareholder portfolios
E) Identifying undervalued firms

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A) Labor costs
B) Spreading specialized resources too thin
C) Conflicts of interest
D) Incentive processes
E) All of the above

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A) Use of internal capital markets
B) Economies of scale and scope
C) Economizing on transaction costs
D) Diversifying shareholder portfolios
E) Identifying undervalued firms

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A) Reducing the size of an aircraft used to increase load factor
B) Economies achieved by an airline flying from spoke to spoke in a hub-and-spoke network
C) Economies of scope along a given route
D) Economies of scale along a given route
E) Reductions in average cost as traffic volume decreases

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A) Increases the interest on the expenses to produce the inventory
B) Inventory depreciates in value while waiting to be used or sold
C) Increases the storage facilities necessary
D) Increases competition with rivals for customers
E) Minimizes the chance of stock-out

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A) Cutbacks in volume will always raise unit costs
B) The firm is unconcerned with labor turnover
C) An example of this process could be the practice of anti-trust law
D) The firm's average cost rises due to moving down the learning curve
E) The process is likely a repetitive manufacturing process such as two-piece aluminum can manufacturing

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