Question detail
CraftCrate serves commuters while opening a second outlet; the case evidence includes net profit margin of ?9,061, sales of 821 units, and a 14% 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 average order value, suppliers 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 fixed and variable costs as identical and ignore the effect on suppliers.
- 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 average order value, suppliers impact, and the business objective in Economies and diseconomies of scale.
Explanation
This is the best-supported choice because Use technical economies, purchasing economies, economies of scale to judge average order value, suppliers impact, and the business objective in Economies and diseconomies of scale. The case evidence gives ?10,561, 821 units, and 14%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse fixed and variable costs, miss the suppliers, 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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