The fixed costs of WeBuy&Sell.com, an e-commerce website, make up about 90 percent of the total costs incurred by the company. However, since its primary means of communication is web advertising, WeBuy&Sell.com has variable costs as low as 10 percent of its total costs. This allows WeBuy&Sell.com to earn high profits at a very low cost. According to the given scenario, WeBuy&Sell.com has _____.
A) zero scalability
B) low scalability
C) infinite scalability
D) high scalability

Question

Quizplus · Accepted Answer

The scenario suggests that WeBuy&Sell.com has high scalability as their primary means of communication is web advertising, which incurs low variable costs, despite having high fixed costs. This indicates that the company can easily increase its output and expand its operations without incurring significant additional costs.

The Fixed Costs of WeBuy&Sell