A firm can produce at a lower cost than its competitors by ______.
A)achieving economies of scale
B)increasing the cost of raw materials and labor
C)using cheap raw materials and inputs
D)cutting corners in production

Question

Quizplus · Accepted Answer

Achieving economies of scale means that a firm can produce larger quantities of a product at a lower cost per unit due to the spread of fixed costs. This can give the firm a cost advantage over its competitors. Increasing the cost of raw materials and labor (B) and cutting corners in production (D) are not sustainable and can negatively impact the quality of the product. Using cheap raw materials and inputs (C) may also negatively impact the quality of the product and may not necessarily result in a lower cost advantage.

A Firm Can Produce at a Lower Cost Than Its