Which type of economy of scale results from a firm producing a diverse range of products?1 pointA buyingB financialC risk bearingD technical
Question
Which type of economy of scale results from a firm producing a diverse range of products?
1 point
A. buying
B. financial
C. risk bearing
D. technical
Solution
The type of economy of scale that results from a firm producing a diverse range of products is C. Risk Bearing.
Here's why:
A. Buying economies of scale occur when a company buys its raw materials in bulk, thus getting a discount for large volume purchases.
B. Financial economies of scale refer to the advantages a company gains due to its size, financial resources, and status. Larger companies often have access to cheaper finance options.
C. Risk-bearing economies of scale occur when a company diversifies its range of products or markets. By spreading its risks, the company can absorb losses from one product with gains from another, thus reducing the overall risk.
D. Technical economies of scale result from efficiencies in the production process itself, often through the use of large-scale technological infrastructure.
So, the answer is C. Risk Bearing.
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