Which of the following was an important characteristic of big businesses in the late 19th century?

• A. A reliance on small, local markets for sales
• B. Strict government regulation limiting expansion
• C. Minimal use of technology in production processes
• D. The use of economies of scale to reduce production costs

Answer: (D)

Verified step by step guidance

1. Understand the concept of economies of scale: This refers to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.
2. Recognize that big businesses in the late 19th century expanded production significantly, which allowed them to spread fixed costs over a larger number of goods, thereby reducing average costs.
3. Identify that reliance on small, local markets is contrary to the nature of big businesses, which typically sought larger, often national or international markets to maximize sales and growth.
4. Note that strict government regulation limiting expansion was not a defining characteristic of big businesses at that time; in fact, regulation was relatively limited, allowing businesses to grow rapidly.
5. Acknowledge that the minimal use of technology is incorrect because big businesses often adopted new technologies to improve production efficiency and reduce costs, complementing economies of scale.