The reduction in average cost resulting from an increase in the volume of a good or service produced is called
A) information cost.
B) transactions cost.
C) diminishing returns.
D) economies of scale.

Question

Quizplus · Accepted Answer

The reduction in average cost resulting from an increase in the volume of a good or service produced is called economies of scale. This is because when the volume of production increases, the fixed costs are spread over a larger quantity, leading to a decrease in average cost. This is commonly seen in industries such as manufacturing or agriculture, where the cost of producing additional units decreases as production increases.

The Reduction in Average Cost Resulting from an Increase in the Volume