Asked by
zabel carlos
on Nov 04, 2024
Verified
The Supply Room, an online school supply store, grew rapidly. As a result of achieving a much larger size, the Supply Room is able to realize (1) volume discounts when buying from its suppliers, and (2) lower transportation costs by shipping in bulk. The best explanation of this is that the Supply Room seems to be experiencing
A) increasing returns to scale.
B) constant returns to scale.
C) decreasing returns to scale.
D) ways to get around the law of diminishing marginal returns.
Volume Discounts
Price reductions offered to buyers purchasing in large quantities, used as an incentive to increase sales volume.
Transportation Costs
Expenses associated with the movement of goods or individuals from one location to another, including factors like fuel, labor, and maintenance.
Returns to Scale
The rate at which output increases as inputs are increased proportionally in the production process.
- Become familiar with the notions of economies and diseconomies of scale.
- Investigate the variables responsible for economies of scale attainment.
Verified Answer
SM
Learning Objectives
- Become familiar with the notions of economies and diseconomies of scale.
- Investigate the variables responsible for economies of scale attainment.
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