ENTREPRENEURIAL PLANNING
OPERATIONS PLANNING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of these is an economy scale?
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Average costs falling because production is rising
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Average costs falling because production is falling
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Average costs falling because productivity is rising
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Average costs are falling because the factory has an extra production line built
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Explanation:
Detailed explanation-1: -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. Costs can be both fixed and variable.
Detailed explanation-2: -The Long-run average cost curve of a firm illustrates how the cost per unit changes with output. Economies of scale means that production gets cheaper when more units are produced (up to a certain point). The savings come from spreading the cost of production over a larger number of units.
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