Which of the following best describes economies of scale?
A)The average cost of production decreases as the level of output increases.
B)The effects on costs related to managerial ability and other hard-to-quantify factors.
C)Cost savings are realized from using many of the same inputs to produce multiple products.
D)The average cost of production increases as the level of output increases.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that a firm experiences when it increases its scale of production, resulting in a decrease in the average cost of production. As the level of output increases, a firm can spread its fixed costs over a larger number of units, resulting in lower per-unit costs. This is known as economies of scale. Hence, option A is the correct answer. Option B refers to intangible factors that affect cost, option C refers to economies of scope, and option D refers to diseconomies of scale.

Which of the Following Best Describes Economies of Scale