When the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases, it is known as _____.
A) economies of scale
B) diseconomies of scale
C) cost cushioning
D) capacity cushion

Question

Quizplus · Accepted Answer

Economies of scale refers to the phenomena where the average unit cost of a product or service reduces as the volume of production or throughput increases. This happens because many of the fixed costs associated with providing the good or services are spread over a larger number of units, thus reducing the per-unit cost.

When the Average Unit Cost of a Good or Service