Production technology displays significant economies of scale,

Question

Quizplus · Accepted Answer

Production technology displays economies of scale, meaning that as production quantity increases, the cost per unit decreases. Therefore, few high-capacity locations are the most effective as they can produce goods at a lower cost due to increased efficiency and bulk buying power. On the other hand, few low-capacity locations would be less effective as they cannot produce as much and therefore cannot benefit from the cost savings associated with economies of scale.

Production Technology Displays Significant Economies of Scale