The In the News article "A Sirius Mistake? FCC Approves XM-Sirius Merger" discusses the merger of two satellite radio companies.In some industries,mergers can be economically justified if economies of scale
A)Lower the average cost of production.
B)Result in more product variety.
C)Act as a barrier to entry.
D)Increase the total cost of production.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that a business can achieve by increasing its scale of production. By merging two companies, they can benefit from the combined resources and lower the average cost of production, resulting in increased profitability. This is why mergers are often economically justified in industries where economies of scale are important, such as in the satellite radio industry.

The in the News Article "A Sirius Mistake? FCC Approves