1. The Coalatree company makes travel clothes, gear, hammocks, and blankets. The
ID: 388534 • Letter: 1
Question
1. The Coalatree company makes travel clothes, gear, hammocks, and blankets. The company has been successfully funded through Kickstarter for its new “Trailhead Pants” and now has enough funding to ramp up production and decrease the overall average expense per pant piece. This large order has made its production more efficient as the scale of its production rises. In terms of specialization, this is an example of:
A- Division of labor B- offshoring business C-Geographical specialiaztion D- Economies of scale
2. An analysis of unemployment rates in Sweden can be described as an application of:
A- Macroeconomics B- unemployment C-Microeconomics D-Inflation
3.A market economy includes which following characteristic?
A- resources and businesses are owned by the government B- income is based on governmental guidelines C- There is no private party D- Economic desicion making happens through economics
4.Which of the following events can shift the level of demand (demand is the relationship between price and quantity demanded)?
A- population grows as a particular market area B- supply increases or decreases C- Government subtitles D- Price of the good changes
Explanation / Answer
1. The correct answer is option D.
Economies of scale - This refers to cost saving done when the level of production increases. So, reduction in economies of scale will decrease the profit and increase in economies of scale will increase the profit. Economies of scale uses large amount of resources and reduces the average cost of manufacturing of one product. The cost advantage produced by economies of scale is due to the increase in volume.
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