Economies of scale refers to the:
A)fall in an FI's average costs of production as its output decreases
B)fall in an FI's average costs of production as its output increases
C)fall in an FI's average costs of production as its output remains stable
D)increase in an FI's average costs of production as its output increases

Question

Quizplus · Accepted Answer

Economies of scale refer to the reduction in average costs of production as output increases. As the volume of production increases, fixed costs can be spread over more units, leading to lower average costs. This allows larger FIs to achieve cost savings and increase profitability.

Economies of Scale Refers to The