Which of the following best describes economies of scale?
A)The average cost of production decreases as the level of output increases.
B)The effects on costs related to managerial ability and other hard-to-quantify factors.
C)Cost savings are realized from using many of the same inputs to produce multiple products.
D)The average cost of production increases as the level of output increases.
E)Cost increases are realized from using many of the same inputs to produce multiple products.

Question

Quizplus · Accepted Answer

Economies of scale refer to the phenomenon where the average cost of production decreases as the level of output increases. This occurs as fixed costs are spread over a larger output, thereby reducing the per-unit cost.

Which of the Following Best Describes Economies of Scale