Economies and Diseconomies of Scale Quiz

What is the primary benefit of economies of scale?

• Increased average costs as production rises

• Decreased average costs as production rises

• Stable costs regardless of production level

• Higher fixed costs per unit

Which of the following is an example of technical economies of scale?

• Bulk purchasing discounts

• Better division of labor

• Specialized machinery and automation

• Financial economies from larger loans

Marketing economies of scale occur when:

• Labor costs are spread over more units

• Storage costs decrease per unit

• The cost of advertising is spread over higher sales volume

• Raw materials are purchased in bulk

What type of economy of scale allows a business to negotiate better interest rates with banks?

• Administrative economies

• Purchasing economies

• Technical economies

• Financial economies

Which of the following is a diseconomy of scale?

• Communication problems between departments

• Lower cost of raw materials

• Specialized equipment usage

• Bulk buying discounts

Managerial economies of scale result from:

• Better storage facilities

• Specialized management roles

• Reduced transport costs

• Lower interest rates

What typically causes diseconomies of scale?

• Better division of labor

• Increased coordination costs

• Bulk purchasing power

• Specialized equipment

When a company becomes too large, which problem is most likely to occur first?

• Lower purchasing costs

• Reduced motivation of workers

• Better financial terms

• Improved communication

What is a key characteristic of internal economies of scale?

• They benefit the entire industry

• They only benefit individual firms

• They increase average costs

• They reduce product quality

Which statement about diseconomies of scale is correct?

• They lead to lower unit costs

• They occur only in small businesses

• They result in higher average costs

• They always improve efficiency