ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Falling average cost as output increases
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Falling average cost as the industry expands
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Falling fixed cost as output increases
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Rising average cost as output increases
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Detailed explanation-1: -The classic example of a technical internal economy of scale is Henry Ford’s assembly line. 1 Another type occurs when firms purchase in bulk and receive discounts for their large purchases or a lower cost per unit of input.
Detailed explanation-2: -Internal economies of scale result from internal factors such as bulk purchasing, hiring more efficient and highly skilled managers and using technological advancements to lower production costs. These often create immediate effects for an organization, which can develop these effects for increased long-term growth.
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: -There are six types of internal economies of scale: technical, managerial, marketing, financial, commercial, and network economies of scale. Technical economies of scale are achieved through improvements and optimizations within the production process.