Asked by Jessica Herriage on May 07, 2024
Verified
According to economies of scale,each new unit that a company manufactures is ________.
A) more expensive to produce than the previous unit
B) less expensive to produce than the previous unit
C) less expensive to produce than the next unit
D) as expensive to produce as all other units
Economies of Scale
The cost advantage achieved when production becomes efficient, as fixed costs are spread over more units of output.
- Gain an understanding of the economies of scale concept and its influence on production expenditures.
- Comprehend the correlation between the amount of goods produced and the overall cost of production.
Verified Answer
AH
Ayesha HussainMay 12, 2024
Final Answer :
B
Explanation :
Economies of scale refer to the cost advantage a company gains by increasing its production volume. This means that as a company produces more units, it can spread its fixed costs (e.g., rent, salaries) over a larger number of units, making each unit less expensive to produce than the previous one. Therefore, choice B is the correct answer.
Learning Objectives
- Gain an understanding of the economies of scale concept and its influence on production expenditures.
- Comprehend the correlation between the amount of goods produced and the overall cost of production.
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