The idea that as the plant gets larger and volume increases, the average cost per unit drops.
A) Capacity
B) Capacity utilization rate
C) Strategic capacity planning
D) Economies of scale
E) Best operating level

Question

Quizplus · Accepted Answer

This idea is known as economies of scale, which occur when the cost per unit of output decreases as volume increases. As the plant gets larger, it can benefit from things like bulk purchasing, specialization of labor, and increased efficiency, all of which can lower the average cost per unit.

The Idea That as the Plant Gets Larger and Volume