Which of the following is not an example of economies of scale?
A) To produce tap water, the water companies had to invest in a huge network of water pipes.
B) Supermarkets can benefit from economies of scale, because they can buy food in bulk and get lower average costs.
C) Producing oil from tar sands in Alberta can generate profits only when the world price of a barrel of oil is high.
D) A bigger financial firm gets a lower rate of interest when borrowing.

Question

Quizplus · Accepted Answer

Producing oil from tar sands in Alberta is an example of diseconomies of scale, as the extraction process becomes increasingly costly and inefficient as the scale of operations increases.

Which of the Following Is Not an Example of Economies