A bank is said to have_____ when its average costs decline as its volume of sales increases.
A)economies of scope.
B)economies of scale.
C)cost diminution.
D)decreasing returns to scale.

Question

Quizplus · Accepted Answer

Economies of scale occur when a company experiences a decrease in average costs as it increases its volume of sales. This could be due to a variety of factors, such as spreading fixed costs over more units, taking advantage of bulk discounts, and increasing specialization and efficiency of labor. This would apply to a bank as well, as increased lending and deposits could lead to these types of cost savings.

A Bank Is Said to Have_____ When Its Average Costs