Question 1

In large organizations, diseconomies of scale can happen because large plants _____.

Accepted Answer

A) are associated with decreased waste 
B) become very complex to manage 
C) have an output that is below the minimum efficient scale 
D) are linked to higher employee motivation 
A) are associated with decreased waste 
B) become very complex to manage 
C) have an output that is below the minimum efficient scale 
D) are linked to higher employee motivation

Question 2

Identify a true statement about economies of scope.

Accepted Answer

A) They exist when costs are reduced by increasing the volume of a specific activity. 
B) They exist when costs are reduced by expanding the scope of a company's operations to related activities. 
C) They occur when a company decreases its output below the minimum efficient scale. 
D) They occur when a company increases its output beyond the minimum efficient scale. 
A) They exist when costs are reduced by increasing the volume of a specific activity. 
B) They exist when costs are reduced by expanding the scope of a company's operations to related activities. 
C) They occur when a company decreases its output below the minimum efficient scale. 
D) They occur when a company increases its output beyond the minimum efficient scale.

Question 3

Which of the following statements is true of cost advantage?

Accepted Answer

A) Large firms are guaranteed to secure a wide cost advantage. 
B) Size and scale do not always guarantee a cost advantage. 
C) Firms with high production volumes are sure to gain a cost advantage. 
D) Firms which produce standardized products have a cost advantage. 
A) Large firms are guaranteed to secure a wide cost advantage. 
B) Size and scale do not always guarantee a cost advantage. 
C) Firms with high production volumes are sure to gain a cost advantage. 
D) Firms which produce standardized products have a cost advantage.

Question 4

A scale curve slope in a particular industry that is quite steep indicates that:

Accepted Answer

A) first movers in a fast-growing market will end up with a cost disadvantage. 
B) first movers in a fast-growing market will secure a widening cost advantage. 
C) the firms in that industry will have a low cost per unit production. 
D) the output of the firms will not be able to meet the minimum efficient scale. 
A) first movers in a fast-growing market will end up with a cost disadvantage. 
B) first movers in a fast-growing market will secure a widening cost advantage. 
C) the firms in that industry will have a low cost per unit production. 
D) the output of the firms will not be able to meet the minimum efficient scale.

Question 5

The relatively fixed costs such as the costs of plant and equipment, which do not increase with an increase in the number of units manufactured, are known as _____.

Accepted Answer

A) fixed cost of production 
B) fixed cost of supply 
C) fixed cost of demand 
D) fixed cost of scale 
A) fixed cost of production 
B) fixed cost of supply 
C) fixed cost of demand 
D) fixed cost of scale

Question 6

Li, the president of Lavender Inc., believes that when employees are trained, they should work on one particular task till they know how to perform it perfectly.Thus, the employees are usually encouraged to repeatedly perform their designated tasks.Li claims that the more an employee engages in a particular task, the more skilled he or she will become at it.Which of the following statements strengthens Li's belief?

Accepted Answer

A) Employees will feel a sense of job dissatisfaction and will lose their overall enthusiasm for their jobs. 
B) The work of employees will speed up while compromising their attention to detail. 
C) This method of training requires a lot of time, effort, patience, and finances. 
D) Employees will find better ways at completing the same task. 
A) Employees will feel a sense of job dissatisfaction and will lose their overall enthusiasm for their jobs. 
B) The work of employees will speed up while compromising their attention to detail. 
C) This method of training requires a lot of time, effort, patience, and finances. 
D) Employees will find better ways at completing the same task.

Question 7

Which of the following statement is true of the learning curve?

Accepted Answer

A) It is simpler to calculate than a scale curve. 
B) It is a tool that managers use to determine the emotional quotient of an employee. 
C) It is the concept that labor costs per unit decrease with increases in volume due to learning. 
D) It is a graphic representation of the relationship between cost per unit and scale of production. 
A) It is simpler to calculate than a scale curve. 
B) It is a tool that managers use to determine the emotional quotient of an employee. 
C) It is the concept that labor costs per unit decrease with increases in volume due to learning. 
D) It is a graphic representation of the relationship between cost per unit and scale of production.

Question 8

Define economies of scale and list out its four principle sources.

Accepted Answer

Economies of scale exist when there is a

Question 9

Trends Inc.has been awarded the best branded clothing company award for three years consecutively.The CEO of the company stated that this was possible due to the company strategically lowering the cost of each unit produced, and successfully maintaining that method in order to effectively contain finances.While comparing Trends with other similar production companies, it was found out that the company did certainly collect more profit than the others.The scenario best illustrates the:

Accepted Answer

A) acquisition strategy. 
B) investment strategy. 
C) pricing strategy. 
D) cost-management strategy. 
A) acquisition strategy. 
B) investment strategy. 
C) pricing strategy. 
D) cost-management strategy.

Question 10

When do economies of scope come into existence?

Accepted Answer

Economies of scope exist when

Question 11

A strategy in which the unique value offered to customers is lower-priced products or services is known as _____.

Accepted Answer

cost advan

Question 12

A scale curve slope in a particular industry that is quite steep indicates that:

Accepted Answer

A) first movers in a fast-growing market will end up with a cost disadvantage. 
B) first movers in a fast-growing market will secure a widening cost advantage. 
C) the firms in that industry will have a low cost per unit production. 
D) the output of the firms will not be able to meet the minimum efficient scale. 
A) first movers in a fast-growing market will end up with a cost disadvantage. 
B) first movers in a fast-growing market will secure a widening cost advantage. 
C) the firms in that industry will have a low cost per unit production. 
D) the output of the firms will not be able to meet the minimum efficient scale.

Question 13

Economies of scale _____.

Accepted Answer

A) exist when cost per unit increases with decrease in volume 
B) are not more relevant in some industries than others 
C) arise from the ability to spread fixed costs of production 
D) produce cost advantages for smaller firms over larger firms 
A) exist when cost per unit increases with decrease in volume 
B) are not more relevant in some industries than others 
C) arise from the ability to spread fixed costs of production 
D) produce cost advantages for smaller firms over larger firms

Question 14

What is true about a minimum efficient scale?

Accepted Answer

A) It shows the optimal quantity for a company to produce. 
B) It can be most efficiently maintained in large industries by increasing the level of production. 
C) It proves that the costs per unit decrease with increases in volume till they reach and then maintain the minimal level. 
D) It can be achieved by large industries during economic downturns because they can easily spread their fixed costs when demand declines. 
A) It shows the optimal quantity for a company to produce. 
B) It can be most efficiently maintained in large industries by increasing the level of production. 
C) It proves that the costs per unit decrease with increases in volume till they reach and then maintain the minimal level. 
D) It can be achieved by large industries during economic downturns because they can easily spread their fixed costs when demand declines.

Question 15

Lavender Inc., a computer manufacturing company, sells its products at costs that are lesser than its competitors as it wishes to gain profits in order to cover more of the competitive market.The company follows this method as it has high unit volumes.The scenario best illustrates the _____.

Accepted Answer

A) acquisition strategy 
B) cost-management strategy 
C) pricing strategy 
D) investment strategy 
A) acquisition strategy 
B) cost-management strategy 
C) pricing strategy 
D) investment strategy

Question 16

What is meant by diseconomies of scale?

Accepted Answer

A) A reduction in costs per unit due to increases in efficiency of production 
B) The smallest level of output (unit volume) that a plant or firm can produce to minimize its long-run average costs 
C) The average total cost of production decreases as a result of increasing the number of different goods produced 
D) An increase in marginal cost when output is increased 
A) A reduction in costs per unit due to increases in efficiency of production 
B) The smallest level of output (unit volume) that a plant or firm can produce to minimize its long-run average costs 
C) The average total cost of production decreases as a result of increasing the number of different goods produced 
D) An increase in marginal cost when output is increased

Question 17

Identify a true statement about the experience curve.

Accepted Answer

A) It is a graphic representation of the relationship between cost per unit and scale of production. 
B) It is a tool that managers use to determine the learning capability of an employee. 
C) It is simpler to calculate than a scale curve. 
D) It is a representation of the relationship between cumulative volume and product cost. 
A) It is a graphic representation of the relationship between cost per unit and scale of production. 
B) It is a tool that managers use to determine the learning capability of an employee. 
C) It is simpler to calculate than a scale curve. 
D) It is a representation of the relationship between cumulative volume and product cost.

Question 18

The Finance Department of Neptune Industries has to audit expenses and profits made each year.It creates separate databases for costs accrued in the form of equipment used in the company and for other costs such as costs of accounting, rent, and managerial salaries.Which of the following is the subject of economies of scale in the described scenario?

Accepted Answer

A) Research and development expenses 
B) General and administrative costs 
C) Incentives and promotional costs 
D) Advertising expenses 
A) Research and development expenses 
B) General and administrative costs 
C) Incentives and promotional costs 
D) Advertising expenses

Question 19

Blaze Corp., a car company, shared its costs of producing cars.It did so by introducing the production of car accessories that are used by customers to upgrade or customize their cars.Blaze Corp.started selling car accessories such as engine oils, wheels, and music player and thus shared its market research costs between cars and car accessories.This led to a definite decrease in the overall cost of production.This scenario best illustrates _____.

Accepted Answer

A) economies of scale 
B) economies of finance 
C) economies of wealth 
D) economies of scope 
A) economies of scale 
B) economies of finance 
C) economies of wealth 
D) economies of scope

Question 20

Define the cost advantage strategy and its characteristics.

Accepted Answer

Some companies use the basic premise of

In large organizations, diseconomies of scale can happen because large plants _____.

Identify a true statement about economies of scope.

Which of the following statements is true of cost advantage?

A scale curve slope in a particular industry that is quite steep indicates that:

The relatively fixed costs such as the costs of plant and equipment, which do not increase with an increase in the number of units manufactured, are known as _____.

Which of the following statement is true of the learning curve?

Define economies of scale and list out its four principle sources.

When do economies of scope come into existence?

A strategy in which the unique value offered to customers is lower-priced products or services is known as _____.

A scale curve slope in a particular industry that is quite steep indicates that:

Economies of scale _____.

What is true about a minimum efficient scale?

Lavender Inc., a computer manufacturing company, sells its products at costs that are lesser than its competitors as it wishes to gain profits in order to cover more of the competitive market.The company follows this method as it has high unit volumes.The scenario best illustrates the _____.

What is meant by diseconomies of scale?

Identify a true statement about the experience curve.

Define the cost advantage strategy and its characteristics.

What Is Business Strategy

Analysis of the External Environment: Opportunities and Threats

Internal Analysis: Strengths, Weaknesses and Competitive Advantage

Differentiation Advantage

Corporate Strategy

Vertical Integration and Outsourcing

Strategic Alliances

International Strategy

Innovative Strategies That Change the Nature of Competition

Competitive Strategy

Implementing Strategy

Corporate Governance and Ethics

Strategy and Society

Filters

Exam 4: Cost Advantage

In large organizations, diseconomies of scale can happen because large plants _____.

Identify a true statement about economies of scope.

Which of the following statements is true of cost advantage?

A scale curve slope in a particular industry that is quite steep indicates that:

The relatively fixed costs such as the costs of plant and equipment, which do not increase with an increase in the number of units manufactured, are known as _____.

Which of the following statement is true of the learning curve?

Define economies of scale and list out its four principle sources.

When do economies of scope come into existence?

A strategy in which the unique value offered to customers is lower-priced products or services is known as _____.

A scale curve slope in a particular industry that is quite steep indicates that:

Economies of scale _____.

What is true about a minimum efficient scale?

Lavender Inc., a computer manufacturing company, sells its products at costs that are lesser than its competitors as it wishes to gain profits in order to cover more of the competitive market.The company follows this method as it has high unit volumes.The scenario best illustrates the _____.

What is meant by diseconomies of scale?

Identify a true statement about the experience curve.

Define the cost advantage strategy and its characteristics.

What Is Business Strategy

Analysis of the External Environment: Opportunities and Threats

Internal Analysis: Strengths, Weaknesses and Competitive Advantage

Differentiation Advantage

Corporate Strategy

Vertical Integration and Outsourcing

Strategic Alliances

International Strategy

Innovative Strategies That Change the Nature of Competition

Competitive Strategy

Implementing Strategy

Corporate Governance and Ethics

Strategy and Society

Filters