Economies of scale are often associated with_______ .

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages experienced by firms as they increase in size and output. Increased specialization is one of the primary drivers of economies of scale, as larger firms are able to divide labor and production processes more efficiently to reduce costs. An upward shift in the long-run average cost curve (A) would indicate that a firm is experiencing diseconomies of scale, while decreasing returns to scale (B) refer to a situation where adding more inputs (like labor or capital) does not lead to a proportionate increase in output. Increased complexity and bureaucracy (D) are not necessarily associated with economies of scale, and in fact may hinder efficiency and increase costs for larger firms.

Economies of Scale Are Often Associated With_______