Question 1 A food truck operator originally produced hamburgers and hotdogs. To

Question

Question 1

A food truck operator originally produced hamburgers and hotdogs. To serve the tastes of their various customers, the hot dog vendor decides to start producing turkey dogs and ham sandwiches as well. Since the new products were introduced, average costs rose dramatically. The vendor is experiencing

Economies of scope

Diseconomies of scope

Economies of scale

Diseconomies of scale

1 points

Question 2

All the factors below are causes of diminishing marginal returns, except

The “fixity’ of some factor

Specialization and division of Labor

Difficulty of monitoring and motivating larger workforces

Increasing complexity of larger systems

1 points

Question 3

An airlines realizes that instead of offering free checked in baggage, they could put a charge on checked baggage without the demand for the tickets decreasing. The space saved can be used to carry priority mail packages, with hardly any additional costs. The airlines has realized

Economies of scale

Diseconomies of scope

Economies of scope

Diseconomies of scale

Question 5

It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries. If Firm A merges with firm B, it can produce both the five radios and the five batteries for $1000. The firm has experienced

Economies of Scale

Economies of Scope

Diseconomies of Scale

Diseconomies of Scope

1 points

Question 6

Ray’s Radios believed the synergies between radio production and battery production could be realized if he expanded. However, due to overseeing the battery expansion Ray devoted less time to the radio business leading to the radio unit costs increasing. Ray’s Radios is experiencing

Economies of scope

Diseconomies of scale

Diseconomies of scope

Economies of scale

1 points

Question 7

What is a synergy or cost complementarity?

the cost of producing different products offered by separate companies would be more expensive when produced by one company

the cost of producing different products offered by separate companies is higher than when produced by one company

the cost of producing different products offered by separate companies is equal to when the products are produced by one company

None of the above

1 points

Question 8

What are economies of scope?

the cost of producing two products jointly by one firm is more than the cost of producing them separately

the cost of producing two products jointly by one firm is lesser than the cost of producing them separately

the cost of producing two products jointly by one firm is equal to the cost of producing them separately

none of the above

Question 24

Firm X owns both tea and coffee plantations. It sells directly to the public. If the firm wants to increase the sales for the coffee, assuming that tea and coffee are substitutes, which of these strategies can it employ?

Increase the price for the tea

Offer free expedited shipping on the coffee

Advertise the tea more heavily

Both A&B

Economies of scope

Diseconomies of scope

Economies of scale

Diseconomies of scale

Explanation / Answer

1. Diseconomies of scope

2 Specialization and division of Labor

3 Economies of scope

5 Economies of Scope

6. Diseconomies of scope

7. the cost of producing different products offered by separate companies is higher than when produced by one company

8 . the cost of producing two products jointly by one firm is lesser than the cost of producing them separately

24. Both A&B

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