Which of the following is most likely to be an example of economies of scale?
A) The per-unit costs on Excel Publishing Company's manuals fall because it adopted a new technology after receiving a large order from the government.
B) Alpha-Beta Inc. raised its price by 10 percent after a 5 percent increase in production costs.
C) Widget Manufacturing doubled its production by opening a new plant that was identical to its old plant.
D) The XYZ Co. increased production 25 percent after a 30 percent increase in all inputs.

Question

Quizplus · Accepted Answer

Economies of scale occur when per-unit costs decrease as production increases. In option A, the per-unit costs fall due to adopting new technology after receiving a large order, which is a typical example of economies of scale.

Which of the Following Is Most Likely to Be an Example