Economies of scale occur when average total costs decrease at higher levels of output.

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Quizplus · Accepted Answer

Economies of scale refer to the phenomenon where average total costs decrease as production levels increase. This is because fixed costs are spread over a larger output, and there are often opportunities for efficiency gains in larger scale production. Therefore, as a company produces more output, their per-unit costs decrease, resulting in greater profitability.

Economies of Scale Occur When Average Total Costs Decrease at Higher