ANSWERS TO CHAPTER 7

Part 1

1. It means that cost per unit is less when a larger quantity is produced.

2. a. The physical properties of enclosed spaces

   b. The savings associated with larger pieces of machinery

   c. More division of labor and specialization

   d. Savings associated with having everything done in a coordinated manner in just one location

   e. Quantity discounts on purchases

3. It means that cost per unit starts to rise after output reaches a certain level.

4. The main reason is that management and control gets harder and more expensive.