When economies of scale are large, firms can reduce their average total cost by

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The best way for firms to reduce their average total cost when economies of scale are large is by merging into an even larger firm. This allows them to take advantage of even greater economies of scale and reduce their overall costs. Selling off subsidiaries or hiring professional managers may help reduce costs, but they are not as effective as merging into a larger firm. Eliminating bureaucratic costs is always a good strategy, but it may not be enough to fully take advantage of economies of scale.

When Economies of Scale Are Large, Firms Can Reduce Their