Unit 9 Key Terms

Question 1

economies of scale

Answer 1

occur when unit costs fall as a business expands, these economies relate to the volume of output

Question 2

economies of scope

Answer 2

occur when a business gains costs advantage by sharing costs between different products and divisions

Question 3

diseconomies of scale

Answer 3

occur when unit costs increase as a business expands

Question 4

conglomerate integration

Answer 4

occurs when one business joins together with another business in a different production process

Question 5

retrenchment

Answer 5

occurs when a business reduces the scale of its operations

Question 6

franchise

Answer 6

occurs when one business sells the right to another business to use its name and sell its goods or services in return for a fee

Question 7

overtrading

Answer 7

occurs when there are liquidity problems linked to the financing of rapid growth