Economies of scale are reductions in average
A)Total cost that result from declining average fixed costs.
B)Fixed cost that result from reducing the firm's scale of operations.
C)Total cost that result from using operations of larger size.
D)Fixed cost resulting from improved technology and production efficiency.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages a firm experiences as it increases its scale of production. This results in lower per-unit costs of production, which leads to declining average total costs. Therefore, the reduction in average total costs is the result of using operations of larger size, as stated in choice C. Choices A, B, and D are not accurate representations of economies of scale.

Economies of Scale Are Reductions in Average