When economies of scale are present,
A)costs per unit decline as output expands.
B)the government feels responsible for breaking up the firm.
C)firms always make handsome profits.
D)costs fall as the size of the product is increased.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that arise from increasing production. As output expands, fixed costs can be spread over more units, leading to a lower cost per unit. This allows firms to produce goods at a lower cost, which can translate into higher profits or lower prices for consumers.

When Economies of Scale Are Present