Andy Dungy owns a company that makes iPod and iPhone accessories. He is trying to increase his sales, primarily because he knows that increasing production lowers the average cost of each unit produced. The reason for growth illustrated in this example is:
A) economies of scope
B) market leadership
C) influence, power, and survivability
D) need to accommodate the growth of key customers
E) economies of scale

Question

Quizplus · Accepted Answer

The reason for growth illustrated in the example is economies of scale. By increasing production, the cost of each unit produced would decrease, resulting in lower average cost. This is a classic example of economies of scale, which refers to the cost advantages a business gains by increasing its scale of production.

Andy Dungy Owns a Company That Makes IPod and IPhone