When increasing size leads to lower per unit costs, we say there are

Question

Quizplus · Accepted Answer

Economies of scale occur when increasing the size or scale of production results in a decrease in per-unit costs. This can be due to factors such as bulk discounts on raw materials, the ability to spread fixed costs over a larger output, or increased productivity from specialized machinery or division of labor. Diseconomies of scale, on the other hand, occur when further expansion leads to higher per-unit costs due to factors such as communication difficulties or decreased efficiency in managing a larger operation. Untapped resources, unique resources, and sunk costs are not related to the concept of economies of scale.

When Increasing Size Leads to Lower Per Unit Costs, We