Larger firms can produce a product at lower average cost than small firms when:
A) economies of scope exist.
B) diseconomies of scale exist.
C) economies of scale exist.
D) cost complementarities exist.

Question

Quizplus · Accepted Answer

Economies of scale occur when a company can achieve cost savings by producing more of a product, with costs per unit decreasing as output increases. This allows larger firms to produce a product at a lower average cost than smaller firms, giving them a competitive advantage.

Larger Firms Can Produce a Product at Lower Average Cost