A manufacturing company that benefits from lower costs per unit as it grows is an example of a firm exhibiting:
A)increasing returns to scale.
B)decreasing returns to scale.
C)increasing opportunity costs.
D)scale reduction.

Question

Quizplus · Accepted Answer

Increasing returns to scale refers to a situation where a company's output increases at a faster rate than its inputs and costs per unit decrease as the scale of production increases. This means that the manufacturing company is benefiting from the advantages of economies of scale as it grows, resulting in lower costs per unit.

A Manufacturing Company That Benefits from Lower Costs Per Unit