The decline in unit costs of a product or service that occurs as the absolute volume of production increases is known as
A)economies of scale.
B)mass customization.
C)specialization.
D)None of the above.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that a company experiences as production volume increases. As production increases, the fixed costs associated with production (such as machinery, equipment, and facilities) are spread across a larger output, resulting in lower per-unit costs. This is why economies of scale are often associated with large-scale production runs or mass-production processes.

The Decline in Unit Costs of a Product or Service