GK
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 refers to the situation where, as the quantity of output goes up, the cost per unit goes down. This is the idea behind “warehouse stores” like Costco or Walmart. In everyday language: a larger factory can produce at a lower average cost than a smaller factory.
Detailed explanation-4: -In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables an increase in scale.
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?