Question detail
GreenGlow serves price-sensitive customers while using retained profit; the case evidence includes break-even output of ?4,655, sales of 220 units, and a 8% change in costs or demand. Which option best applies Explain purchasing economies and technical economies of scale?
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 technical economies, purchasing economies, economies 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 break-even and profit 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 technical economies, purchasing economies, economies of scale to judge gross profit margin, shareholders impact, and the business objective in Economies and diseconomies of scale.
Explanation
This answer fits the scenario because Use technical economies, purchasing economies, economies of scale to judge gross profit margin, shareholders impact, and the business objective in Economies and diseconomies of scale. The case evidence gives ?6,155, 220 units, and 8%, 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 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 purchasing economies and technical economies of scale..
Answer by clearly explaining how to explain purchasing economies and technical economies of scale..
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