_______ exist when the average total cost of providing insurance coverage decreases as a firm provides coverage for larger groups of people.

Question

Quizplus · Accepted Answer

Scale economies refer to the cost advantages that firms achieve when they increase their scale of operation. In the context of insurance, scale economies exist when the average total cost of providing coverage decreases as a firm provides coverage for larger groups of people, such as when the fixed costs of administrative and overhead expenses can be spread over a larger number of insured individuals.

_______ Exist When the Average Total Cost of Providing Insurance