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Questions and Answers

What is the definition of economies of scale?

  • Reducing costs per unit by decreasing production
  • Increasing costs per unit by increasing production
  • Increasing costs per unit by decreasing production
  • Reducing costs per unit by increasing production (correct)
  • What is the purpose of a buffer stock?

  • To increase demand for a product
  • To cover unforeseen shortages (correct)
  • To cover expected surpluses
  • To reduce the production of a product
  • What is factory gate pricing?

  • The total cost of a product including transport costs
  • The cost of a product excluding transport costs (correct)
  • The cost of a product including taxes and duties
  • The cost of a product excluding taxes and duties
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