Three students-Bernardo, Astrid, and Rajiv-are discussing how to improve efficiency in a manufacturing context. Bernardo says that the company must work toward achieving lower costs per unit of production. Rajiv believes that the company should use the same resources to make more related products. Astrid holds that avoiding the costs of growing too large and creating waste will improve efficiency. According to Astrid, avoiding the costs of growing too large and creating waste will improve efficiency. She is referring to
A)diseconomies of scale.
B)diseconomies of scope.
C)economies of scale.
D)economies of scope.
E)economies of size.

Question

Quizplus · Accepted Answer

Astrid is referring to diseconomies of scale, which occur when a company grows too large and experiences a decrease in efficiency or an increase in costs per unit of production. This is the opposite of economies of scale, which occur when a company's efficiency and cost per unit of production improves as it grows larger. Bernardo's suggestion aligns with economies of scale, while Rajiv's suggestion aligns with economies of scope, which involve using the same resources to produce a variety of related products.

Three Students-Bernardo, Astrid, and Rajiv-Are Discussing How to Improve Efficiency