Relative operating costs are reduced for merged companies because of an increase in size that allows for the reduction or elimination of overlapping resources

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that companies can achieve by increasing their level of production or size of operation. In the case of merged companies, they can benefit from economies of scale by reducing or eliminating overlapping resources, such as facilities, staff, and equipment, which lowers their relative operating costs. By leveraging their increased size, merged companies can achieve lower unit costs and higher efficiency, which improves their competitiveness and profitability.

Relative Operating Costs Are Reduced for Merged Companies Because of an Increase