When economies of scale exist, a firm's _____ ratio is likely to decrease if the size of the firm increases substantially.
A)days sales outstanding
B)total assets turnover
C)variable cost of goods sold
D)times interest earned
E)price earnings (P/E)

Question

When economies of scale exist, a firm's _____ ratio is likely to decrease if the size of the firm increases substantially. 
A)days sales outstanding
B)total assets turnover
C)variable cost of goods sold
D)times interest earned
E)price earnings (P/E)

Quizplus · Accepted Answer

Economies of scale imply that as a firm increases in size, its average costs per unit decrease. This typically affects the variable cost of goods sold, as larger production volumes can lead to more efficient use of resources and lower costs per unit.

When Economies of Scale Exist, a Firm's _____ Ratio Is