16-65 Which of the following implies that small FIs are more cost efficient than large FIs,and that in a freely competitive environment for financial services,small FIs may outperform their larger counterparts?
A)Economies of scale.
B)Diseconomies of scale.
C)Economies of scope.
D)Diseconomies of scope.
E)Constant returns to scale.

Question

Quizplus · Accepted Answer

Diseconomies of scale refer to a situation where an increase in the size/scale of operations leads to an increase in costs per unit of output, indicating that larger FIs may not be as cost-efficient as smaller FIs. Therefore, in a competitive environment, small FIs may have a comparative advantage over their larger counterparts.

16-65 Which of the Following Implies That Small FIs Are