The fact that a large company can enjoy savings from producing goods in high volumes that are not available to a small company is called
A) economies of scale.
B) horizontal integration.
C) vertical integration.
D) economies of scope.

Question

Quizplus · Accepted Answer

Economies of scale refers to the cost advantages that a company can achieve by producing goods or services in large quantities. It allows a company to spread fixed costs (such as machinery and equipment) over a larger number of units, which results in lower average costs. This advantage is not available to small companies, which have lower production volumes and higher average costs. Horizontal integration refers to the strategy of acquiring or merging with competitors at the same stage of the supply chain, while vertical integration refers to the strategy of acquiring or merging with companies at different stages of the supply chain. Economies of scope, on the other hand, refer to the cost advantages achieved by producing multiple products or services using the same resources or technology.

The Fact That a Large Company Can Enjoy Savings from Producing