Distinguish between vending machines and mail-order houses. Explain the usefulness of mail-order houses. What type of products generally handled by vending machines and mail-order houses?

Explanation:

A vending machine is a machine that provides items which includes snacks, beverages, lottery tickets etc to consumers after cash, or a credit card is inserted into the machine. In addition, they are usually automated.

Mail order houses on the other hand, are companies that sell or manage mail orders. They sell their products through mail and there usually is no direct contact between the seller abs the buyer.

Mail order houses eliminates the use of middlemen: this is one of the most important usefulness of mail order, eliminating the use of middlemen thereby saving both the buyer and seller whatever they should have parted with for the middleman.

Bad debt is non existent: Mail order houses do not give out credit to customers, and as such, bad debts never come into the scenario.

Convenience: Mail orders typically deliver to the doorstep of customers. This is very convenient for the customers.

Products handled by mail order include;

Office supplies

Jewelry

Computer hardware

Beauty products

Products handled by vending machines include;

Beverages

Snacks

Lottery tickets

Cigarettes

Option(c) is correct.

Explanation:

Given that,

(1)Total costs = $2,500 at Output = 1250 covers

(2)Total costs = $4000 at Output = 1500 covers

So,

(1)Average Total Cost =

= = 2

(2) Average Total Cost =

= = 2.67

This occurs when average cost increases with increase in the output, if average total cost decreases with an increase in the level of output then the company exhibits economics of scale.

∴ Average total cost increases with increase in the level of output. Hence, company exhibits a diseconomies of scale.