4. The learning curve suggests that as cumulative output increases, marginal costs fall. 5. Exploiting economies of scale might be a motive for vertical disintegration. 6. Rationalisation is associated with cost cuts. 7. Transaction costs are the same thing as production costs. 8. Diversification by firms is not in the interest of shareholders. 9. A situation in which a company merges with other companies that make similar products can be referred to as horizontal integration. 10. Economies of scope exist if a firm can produce several product lines at a given output level more cheaply than a combination of separate firms each producing a single product at the same output level. 11. Diversification reduces firm's level of profit. 12. Any expansion of firm's activities, regardless whether in correlated or uncorrelated business operations leads to a diversified portfolio of activities and reduces firm's risk