When it is cheaper for one firm to produce a particular product, ____ exist(s).
A)economies of scale
B)economies of scope
C)diminishing marginal returns
D)cross-subsidization

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages a firm experiences when it produces a larger quantity of a particular product. This is typically due to spreading fixed costs (such as rent, equipment, and management) over a larger output, reducing the average cost per unit. Therefore, when it is cheaper for one firm to produce a particular product, it is likely due to economies of scale.

When It Is Cheaper for One Firm to Produce a Particular