________ 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).

Question

Quizplus · Accepted Answer

The concept being referred to is economies of scale, where as the firm increases the volume of production, its average cost per unit of production decreases due to factors such as specialization, efficient use of resources, and bargaining power with suppliers. A is incorrect as it refers to a different concept, sustainable competitive advantages. C is incorrect as it refers to a temporary advantage that a firm may enjoy due to factors such as a new product launch or a change in market conditions. D is incorrect as it refers to the cost advantages that a firm may enjoy due to producing a variety of goods and services using common resources or processes.

________ Are Said to Exist When the Increase in Firm