Conditions under which average total costs for a unit of production is lower at higher levels of output are called ________.
A) scope of involvement
B) economies of scale
C) learning curves
D) fixed costs

Question

Quizplus · Accepted Answer

Economies of scale occur when the average total cost of producing a unit decreases as the level of output increases. This happens due to factors such as spreading fixed costs over a greater number of units and taking advantage of efficiencies that come with producing in larger quantities. Thus, economies of scale lead to lower production costs and increased profitability for firms.

Conditions Under Which Average Total Costs for a Unit of Production