Question

Q8: Which of the following statement is not true?

a. Oil price hike due to the Iraq war has increased the average cost of production of other goods

b. Innovations in the semiconductor industry during the second half of the 20th Century resulted in decreased production costs

c. Economies of scope are closely related to business diversification

d. Hub-and-Spoke networks in the airline industry will increase production costs.

Answer 1

D) Hub-and-Spoke networks in the airline industry will increase production costs.

It reduce the cost of service and production as value chain expanded.

Oil price hike due to the Iraq war has increased the average cost of production of other goods because it increase inflation induced of fuel used in different economic activities.

Innovations in the semiconductor industry during the second half of the 20th Century resulted in decreased production costs, yes semiconductor reduce chils size and thus size of computer etc. Economies of scope are closely related to economy of scale and thus it led to business diversification.