Examples of economies of scale are:
A. the decrease in overall transaction costs that occur as volume increases.
B. the decrease in overall information costs that occurs as more transactions are handled.
C. the reduction in the cost per transaction that occurs as the number of transactions increase.
D. the additional fees financial intermediaries charge on small accounts.
Answer: C
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The income per capita of a country with a population of 50,000 is $4,500. Its gross domestic product is ________
A) $54,500 B) $900,000 C) $225,000,000 D) $120,000,000
Many professional sports athletes have incentive clauses in their contracts. These indicate that
A) the team owner has asymmetric information. B) the athlete might engage in moral hazard, which the team owner wishes to avoid. C) the athlete might engage in adverse selection, which the team owner wishes to avoid. D) the athlete has stronger negotiators.