When a firm buys greater quantities of raw materials and parts,
A) fixed costs will decrease at the same rate as variable costs.
B) variable costs should be lower.
C) neither variable nor fixed costs will be affected.
D) variable costs will be higher.
E) fixed costs will increase.

Question

Quizplus · Accepted Answer

When a firm buys greater quantities of raw materials and parts, it often benefits from economies of scale, which can lead to a reduction in the cost per unit of the variable costs.

When a Firm Buys Greater Quantities of Raw Materials and Parts