Economies of scale are:
A) countries that specialize in selling devices for measuring weight.
B) the advantages of large-scale production that reduce average cost as quantity increases.
C) the advantages of small-scale production that reduce average cost as quantity decreases.
D) regulations that specify a minimum firm size.

Question

Quizplus · Accepted Answer

Economies of scale refer to the advantages that large-scale production provides in reducing average cost as the quantity produced increases. This could be due to, for example, spreading fixed costs such as equipment over a larger number of units produced, or having more bargaining power with suppliers due to a larger order size. Option A is incorrect as it refers to specialization rather than economies of scale. Option C is incorrect as it describes diseconomies of scale, where costs increase as quantity decreases. Option D is incorrect as it describes regulation rather than economic principles.

Economies of Scale Are