The larger the firm,the lower the cost per unit. This is a principle of:
A)Gains from trade
B)Product differentiation
C)Abandoned product ranges
D)Imperfect competition
E)Economies of scale

Question

Quizplus · Accepted Answer

The statement "the larger the firm, the lower the cost per unit" is an indication of economies of scale. As a firm expands its scale of production, it can spread fixed costs over a larger number of units, leading to a lower cost per unit of output. This allows the firm to achieve lower prices, attract more customers, and become more competitive in the market.

The Larger the Firm,the Lower the Cost Per Unit