Businesses benefit from economies of scale when the cost of an investment can be:
A) spread across increasing units of production.
B) used in serving a niche and loyal customer base.
C) used to build a brand image for products through advertising.
D) leveraged to recruit consumers to promote a product or service.
E) diverted to implementing technology upgrades in the business model.

Question

Quizplus · Accepted Answer

Economies of scale occur when the cost per unit of production decreases as the volume of production increases, allowing businesses to spread the fixed costs of an investment over a larger number of units, thereby reducing the cost per unit.

Businesses Benefit from Economies of Scale When the Cost of an Investment