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Free CIMAPRA17-BA1-1 Exam Braindumps
BA1 - Fundamentals of Business Economics Questions 116–120 (page: 25)

Updated On: 9-Feb-2026
Page 25 of 95
PDF with 468 Questions

If in the short run a business raises the output of its product then

  1. average fixed cost will remain constant over the whole range of output
  2. average variable cost will fall over the whole range of output
  3. average total cost will initially fall and then rise as output is increased
  4. average total cost will fall until constant returns to scale achieved

Answer(s): C



In the short run average variable costs may fall as output rises.
Which ONE of the following is a cause of this?

  1. Fixed costs are spread across a larger amount of output
  2. The firm enjoys economies of scale
  3. Greater efficiency in use of variable resources such as labor
  4. Total costs rise less than proportionately with output

Answer(s): C



For a business, diseconomies of scale occur when

  1. the gains from the division of labor are exhausted
  2. all available economies of scale have been exhausted
  3. the market for the firm's product becomes saturated
  4. difficulties in managing a large firm lead to rising long run average costs

Answer(s): D



All of the following are examples of economies of scale except which one?

  1. Greater opportunities for technological change
  2. The ability to spread some marketing cost over a larger output
  3. The ability to employ specialist managers
  4. Access to cheaper finance

Answer(s): A



Economies of scale can result from all the following except one.
Which is the exception?

  1. An increase in the size of a firm's capacity and plant
  2. A bus company replacing smaller buses with larger buses
  3. A factory employing two shifts of workers rather than one shift per day
  4. Increased firm size allowing the firm to employ specialist managers

Answer(s): C



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