When economies of scale are large,firms can reduce their average total cost by:

Question

Quizplus · Accepted Answer

When economies of scale are large, merging into even larger firms can lead to further reduction in average total cost due to increased efficiencies in production, distribution, and other operational expenses. Selling off subsidiaries may not necessarily lead to such cost reductions, eliminating bureaucratic costs may only have a limited effect, and hiring professional managers may not necessarily reduce costs.

When Economies of Scale Are Large,firms Can Reduce Their Average