Question detail
RiverRun Catering serves health-conscious consumers while cutting delivery times; the case evidence includes cash inflow of ?8,375, sales of 230 units, and a 44% change in costs or demand. Which option best applies Explain how growth can create diseconomies of scale through communication problems, coordination issues and reduced staff motivation?
Try the question, check the answer, then read the explanation to understand the curriculum point.
At a glance
MCQ
Type
practice
Style
Topic
Expanding a business
Question
- A. Use economies of scale, diseconomies of scale to judge gross profit margin, shareholders impact, and the business objective in Economies and diseconomies of scale.
- B. Give only a definition of Expanding a business without using the case evidence.
- C. Treat internal and external finance as identical and ignore the effect on shareholders.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use economies of scale, diseconomies of scale to judge gross profit margin, shareholders impact, and the business objective in Economies and diseconomies of scale.
Explanation
The answer is commercially strongest because Use economies of scale, diseconomies of scale to judge gross profit margin, shareholders impact, and the business objective in Economies and diseconomies of scale. The case evidence gives ?9,875, 230 units, and 44%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse internal and external finance, miss the shareholders, or ignore the business objective.
Common mistake
Economies and diseconomies of scale common mistake 1
Giving a vague answer instead of directly addressing: Explain how growth can create diseconomies of scale through communication problems, coordination issues and reduced staff motivation..
Answer by clearly explaining how to explain how growth can create diseconomies of scale through communication problems, coordination issues and reduced staff motivation..
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