Economies of scale are said to exist when the increase in firm size (measured in terms of volume of production) are associated with lower costs (measured in terms of average costs per unit of production).

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Quizplus · Accepted Answer

This is the definition of economies of scale. As firms increase in size and volume of production, they can benefit from cost efficiencies such as spreading fixed costs over more units, purchasing inputs in bulk at lower prices, and using specialized equipment that is more efficient than smaller-scale alternatives. These efficiencies result in a lower average cost per unit of production.

Economies of Scale Are Said to Exist When the Increase