Asked by Muhammad Naeem Nizami on May 28, 2024
Verified
The pharmaceutical industry offers an excellent example of
A) economies of scale.
B) diseconomies of scale.
C) diminishing returns.
D) negative returns.
Pharmaceutical Industry
The sector of the economy that discovers, develops, produces, and markets drugs or pharmaceutical products for use as medications.
- Familiarize oneself with the relationship between the size of production and the theories of economies of scale and diseconomies of scale.
- Recognize industries that benefit from economies of scale and those that do not.
Verified Answer
MC
morgan cancellarichJun 03, 2024
Final Answer :
A
Explanation :
The pharmaceutical industry benefits from economies of scale as the production of medicine requires a significant initial investment in research and development and production facilities. Once these fixed costs are covered, the per-unit cost of manufacturing decreases, resulting in lower cost per unit and higher profit margins.
Learning Objectives
- Familiarize oneself with the relationship between the size of production and the theories of economies of scale and diseconomies of scale.
- Recognize industries that benefit from economies of scale and those that do not.