Question detail
SolarSprout serves price-sensitive customers while using retained profit; the case evidence includes break-even output of ?9,720, sales of 970 units, and a 37% 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 capacity utilisation, managers 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 break-even and profit as identical and ignore the effect on managers.
- 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 capacity utilisation, managers impact, and the business objective in Economies and diseconomies of scale.
Explanation
Choose this response because Use economies of scale, diseconomies of scale to judge capacity utilisation, managers impact, and the business objective in Economies and diseconomies of scale. The case evidence gives ?11,220, 970 units, and 37%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse break-even and profit, miss the managers, 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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