A group of business people are having coffee. Which of the following quotations describes economies of scale?
A)"The new production process we've installed uses less capital and labour than the old one."
B)"The new assembly line has higher capital costs, but the fall in workers' hours has lowered overall costs."
C)"The costs of per-unit production have fallen dramatically as we have increased the length of the production runs."
D)"Despite the higher costs of negotiating the contracts, hiring the cleaning firm is much cheaper than using our own staff."
E)"The computer servicing people we have hired work very well as an integrated problem-solving group."

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages a business can achieve as it increases its output. Choice C directly references a decrease in costs per unit of production as production runs are increased, indicating the benefits of economies of scale. The other options do not specifically refer to this concept.

A Group of Business People Are Having Coffee