Which economic concept explains why a large drugstore chain can produce at a lower average cost than Whoville Pharmacy, an individually owned drugstore?
A)increasing marginal returns
B)diminishing marginal returns
C)economies of scale
D)diseconomies of scale
E)constant returns to scale

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages of producing in larger quantities. A large drugstore chain can take advantage of economies of scale by purchasing inventory in bulk, using efficient technology, and spreading fixed costs (such as rent and advertising) across many stores, resulting in lower average cost.

Which Economic Concept Explains Why a Large Drugstore Chain Can