BUS 401 Midterm 2 (Vanderkelen) || All Answers are Valid.
Economies of Scale correct answers A reduction in costs per unit due to increases in efficiency of
production as the number of goods being produced increases
Fixed cost of production correct answers Costs such as plant and equipment, which are relatively
fixed, meaning that they do not increase with an increase in the number of units produced.
General and administrative costs (G&A) correct answers Expenses and taxes that are directly
related to the general operation of the company, and executive salaries, general support, and
taxes related to the overall administration of the company.
task specialization correct answers Breaking a large process into smaller tasks that require
specialized knowledge.
employee specialization correct answers Increased efficiency that results when employees
perform a narrow range of tasks over and over again, leading them to acquire specialized
knowledge that helps them complete the task more efficiently.
Scale Curve correct answers A graphic representation of the relationship between cost per unit
and scale (volume) of production in a given time period.
minimum efficient scale correct answers The smallest level of output (unit volume) that a plant
or firm can produce to minimize its long-run average costs. In a graphic presentation of
output/unit volume (x-axis) and cost per unit (y-axis), it is the output level where costs per unit
flatten and no longer continue going down with increased output
diseconomies of scale correct answers An increase in marginal cost when output is increased.
economies of scope correct answers The average total cost of production decreases as a result of
increasing the number of different goods produced.
, cost advantage strategy correct answers A strategy in which the unique value offered to
customers is lower-priced products or services
learning curve correct answers The concept that labor costs per unit decrease with increases in
volume due to learning. New skills or knowledge can be quickly acquired initially, but
subsequent learning becomes much slow
experience curve correct answers A representation of the relationship between cumulative
volume and product cost.
law of experience correct answers Costs per unit decrease with increases in cumulative volume
of production.
relative cost correct answers The costs incurred by one company compared to the costs paid by a
competitor
proprietary knowledge correct answers Information that is not public and that is viewed as the
property of the holder.
inputs correct answers Resources such as people, raw materials, energy, information, or
financing that are put into a system (such as an economy, manufacturing plant, computer system,
etc.) to obtain a desired output.
business model correct answers The plan and set of activities implemented by a company to offer
unique value and generate revenue and make a profit from operations.
value chain correct answers The sequence of all activities that are performed by a firm to turn
raw materials into the finished product that is sold to a buyer.
Economies of Scale correct answers A reduction in costs per unit due to increases in efficiency of
production as the number of goods being produced increases
Fixed cost of production correct answers Costs such as plant and equipment, which are relatively
fixed, meaning that they do not increase with an increase in the number of units produced.
General and administrative costs (G&A) correct answers Expenses and taxes that are directly
related to the general operation of the company, and executive salaries, general support, and
taxes related to the overall administration of the company.
task specialization correct answers Breaking a large process into smaller tasks that require
specialized knowledge.
employee specialization correct answers Increased efficiency that results when employees
perform a narrow range of tasks over and over again, leading them to acquire specialized
knowledge that helps them complete the task more efficiently.
Scale Curve correct answers A graphic representation of the relationship between cost per unit
and scale (volume) of production in a given time period.
minimum efficient scale correct answers The smallest level of output (unit volume) that a plant
or firm can produce to minimize its long-run average costs. In a graphic presentation of
output/unit volume (x-axis) and cost per unit (y-axis), it is the output level where costs per unit
flatten and no longer continue going down with increased output
diseconomies of scale correct answers An increase in marginal cost when output is increased.
economies of scope correct answers The average total cost of production decreases as a result of
increasing the number of different goods produced.
, cost advantage strategy correct answers A strategy in which the unique value offered to
customers is lower-priced products or services
learning curve correct answers The concept that labor costs per unit decrease with increases in
volume due to learning. New skills or knowledge can be quickly acquired initially, but
subsequent learning becomes much slow
experience curve correct answers A representation of the relationship between cumulative
volume and product cost.
law of experience correct answers Costs per unit decrease with increases in cumulative volume
of production.
relative cost correct answers The costs incurred by one company compared to the costs paid by a
competitor
proprietary knowledge correct answers Information that is not public and that is viewed as the
property of the holder.
inputs correct answers Resources such as people, raw materials, energy, information, or
financing that are put into a system (such as an economy, manufacturing plant, computer system,
etc.) to obtain a desired output.
business model correct answers The plan and set of activities implemented by a company to offer
unique value and generate revenue and make a profit from operations.
value chain correct answers The sequence of all activities that are performed by a firm to turn
raw materials into the finished product that is sold to a buyer.
