Economies of scale:

Question

Economies of scale:

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages a firm gains by increasing its production. As the firm grows and produces more output, it is able to spread fixed costs (such as rent, equipment, and salaries) over a larger output, which reduces the average cost of production. This is an advantage that is typically only available to larger firms, as small firms are not able to produce at a high enough volume to achieve these cost savings. Therefore, option B is the correct choice. Options A, C, and D are incorrect, as they do not accurately describe economies of scale.

Economies of Scale