Which of the following physical relationships might generate economies of scale?
A) Proportionally larger pipes can transport more than a proportional increase in oil.
B) Larger equipment tends to weigh more and use more fuel on a per-unit-of-output basis.
C) Each lift truck requires one lift truck driver.
D) A doubling of all inputs leads to a doubling of output.

Question

Quizplus · Accepted Answer

Proportional increase in the size of the pipes can transport more oil, which means a larger amount of oil can be transported at lower costs, generating economies of scale.

Which of the Following Physical Relationships Might Generate Economies of Scale