__________are achieved when the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases.
A) Unfocused factories
B) Safety capacities
C) Diseconomies of scale
D) Economies of scale

Question

Quizplus · Accepted Answer

Economies of scale are achieved when the average unit cost decreases with an increase in capacity and/or volume of throughput. This happens because fixed costs are spread over a larger number of units, resulting in lower per-unit costs. Option A refers to factories that have no clear focus or strategy. Option B refers to the extra capacity that a firm may keep as a buffer to handle unexpected demand fluctuations. Option C refers to a situation where average costs increase as the firm grows, possibly due to bureaucracy or inefficiencies.

__________Are Achieved When the Average Unit Cost of a Good