What are economies of scale?
A)decreasing average costs as production increases
B)increasing average costs as production increases
C)increasing fixed costs as production increases
D)none of the above

Question

​What are economies of scale?
A)​decreasing average costs as production increases
B)increasing average costs as production increases
C)increasing fixed costs as production increases
D)​none of the above

Quizplus · Accepted Answer

Economies of scale refer to the decreasing average costs achieved by a company as it increases its production levels. This is due to spreading fixed costs over a larger output and benefiting from better purchasing power and production efficiencies. Option B is incorrect as it describes diseconomies of scale where average costs increase with production. Option C is also incorrect as it implies that fixed costs increase with output, which is not necessarily the case for economies of scale. Option D is incorrect as one of the options must be correct.

​What Are Economies of Scale

What Are Economies of Scale