Economies of scale means
A) that average fixed costs are rising.
B) the economy is favorable for a new business to sell scales that measure weight.
C) as a firm produces and sells more products, the average cost of each product decreases.
D) the company has better managerial capacity.
E) the intellectual value of the business is increasing.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that a business organization experiences as its scale of operation increases. As the production of a good or service increases, the average cost per unit decreases due to the spreading of fixed costs over a larger production volume. The result is an increase in efficiency, productivity and profitability.

Economies of Scale Means