Why does specialization become more profitable on a larger scale? I. Large firms are more profitable than small firms. II. Cost efficiencies become possible when the production scale is significantly large relative to the cost of the machines being used. III. Large-scale production justifies the acquisition of more knowledge on a specific activity.
A) I and II only
B) I, II, and III
C) I and III only
D) II and III only

Question

Quizplus · Accepted Answer

Specialization becomes more profitable on a larger scale because cost efficiencies (economies of scale) are achieved when production is large relative to the cost of machinery, and large-scale production allows for more in-depth knowledge and expertise in specific activities.

Why Does Specialization Become More Profitable on a Larger Scale