When firms enjoy economies of scale they:
A) have a greater share of liquid assets than rivals.
B) have bigger production facilities than their competitors.
C) have a wider employee base than their competitors.
D) leverage the cost of an investment across increasing units of production.
E) leverage investment costs to decrease their subscriber acquisition costs.

Question

Quizplus · Accepted Answer

Economies of scale occur when a firm can reduce its per-unit costs as it increases production, often by spreading fixed costs (like investments in equipment or technology) over a larger number of units. This is accurately described by option D, where leveraging the cost of an investment across increasing units of production leads to lower average costs per unit.

When Firms Enjoy Economies of Scale They