By expanding the size of the market, exporting can enable a firm to achieve __________________, thereby lowering its unit costs. Firms that don't export often lose out on significant opportunities for ________________ and cost reduction.

Question

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. Exporting allows firms to access larger markets beyond their domestic boundaries, thus increasing their production levels and achieving economies of scale, which in turn lowers unit costs. Growth opportunities are also significant for firms that export, as they can tap into new markets, increase their sales, and enhance their profitability.

By Expanding the Size of the Market, Exporting Can Enable