When significant economies of scale exist in manufacturing, distribution, service, or other functions of a business, larger firms (up to some point) have a cost advantage over smaller firms.

Question

Quizplus · Accepted Answer

Economies of scale mean that as a firm increases production, the cost per unit decreases, giving larger firms a cost advantage over smaller ones due to spreading fixed costs over more units.

When Significant Economies of Scale Exist in Manufacturing, Distribution, Service