Which of the following statements is TRUE with respect to economies of scale?
I. It is cheaper for 500 manufacturers to make 30,000 cars each.
II. It is cheaper for five manufacturers to make 3,000,000 cars each.
III. Bigger firms mean fewer firms.
A) I only
B) I and III only
C) II and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale. Therefore, it is cheaper for fewer manufacturers to produce a larger number of cars each (II), and bigger firms often result in fewer firms in the market (III).

Which of the Following Statements Is TRUE with Respect to Economies