Economies of scale can be caused by all of the following except:

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that a firm can achieve by increasing the scale of production. As the scale of production increases, the average cost per unit of output tends to decrease due to factors such as price discounts for large scale purchases, labor specialization, use of more productive equipment, and more cost-efficient methods of marketing. Option D, increases in the firm's average total cost, is not a cause of economies of scale, but rather the opposite - it is a sign of diseconomies of scale, which occur when the cost per unit of output increases as the scale of production increases.

Economies of Scale Can Be Caused by All of the Following