BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the average costs of production decreasing as a firm expands
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the average costs of production rising as a firm expands
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the average costs of production remaining the same as a firm expands
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the average costs of production at first decreasing, then increasing, as a firm expands
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Detailed explanation-1: -Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output. The advantage arises due to the inverse relationship between the per-unit fixed cost and the quantity produced. The greater the quantity of output produced, the lower the per-unit fixed cost.
Detailed explanation-2: -What Are Economies of Scale? Economies of scale are cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs. This happens because costs are spread over a larger number of goods.
Detailed explanation-3: -Economies of scale is an economic term that is also known as diminishing marginal cost. The term implies that the cost per unit of production decreases as the firm enlarges its production. Economics of scale usually occurs when the firm expands its production and the average cost of output starts diminishing.
Detailed explanation-4: -Economies of scale refer to the cost advantages a company gains with the increase in production. This happens because production costs can now be spread over a large number of goods. The bigger the size of a company, the bigger the more the cost savings with the increase in production.
Detailed explanation-5: -Economies of scale means reduction in unit of production. Economies of scale refers to reduced cost per unit that arise from increased total output of a product. Was this answer helpful?