Economies of scale are
A)charges to savers and borrowers imposed by banks in exchange for reducing transactions costs.
B)the reduction in costs per unit that accompanies an increase in volume.
C)decreases in transactions costs that occur as information costs increase.
D)decreases in information costs that occur as transactions costs increase.

Question

Quizplus · Accepted Answer

Economies of scale refers to the decrease in costs per unit that occurs as the volume of production or output increases. This is because fixed costs are spread over a larger number of units, leading to lower per unit costs. This concept is commonly observed in manufacturing, but also applies to other sectors such as finance, as larger banks may be able to offer services at lower costs due to their size and scale. Options A, C, and D are not accurate definitions of economies of scale.

Economies of Scale Are