Economies of scale occur when ________.
A) increasing production lowers the average cost of each unit produced
B) increasing production increases the average cost of each unit produced
C) decreasing production lowers the average cost of each unit produced
D) decreasing production increases the average cost of each unit
E) increasing production increases the fixed cost of doing business

Question

Quizplus · Accepted Answer

Economies of scale occur when increasing production lowers the average cost of each unit produced. This is because fixed costs are spread across a larger output, resulting in a lower per-unit cost. Additionally, larger production runs may allow for more efficient use of resources and specialized equipment, further reducing costs per unit.

Economies of Scale Occur When ________