The ability to spread fixed costs over a large volume is one of the sources of economies of scale.

Question

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Spreading fixed costs over a larger volume of production or sales is a key feature of economies of scale. As the volume of production increases, the costs associated with fixed inputs such as machinery, equipment, and buildings can be spread out over a larger number of units, reducing the cost per unit. This makes the business more efficient and profitable, leading to economies of scale.

The Ability to Spread Fixed Costs Over a Large Volume