In the context of costs involved in producing a product by an industry, _____ means that an industry's costs to produce have declined relative to the price of its goods and services.

Question

In the context of costs involved in producing a product by an industry, _____ means that an industry's costs  to produce have declined relative to the price of its goods and services.

Quizplus · Accepted Answer

Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output. The advantage arises due to the inverse relationship between per-unit fixed cost and the quantity produced. The greater the quantity of output produced, the lower the per-unit fixed cost. This can lead to a decline in the costs to produce relative to the price of goods and services, making the firm more competitive.

In the Context of Costs Involved in Producing a Product