Economies of scale implies that increases in the scale of operation are associated with
A) decreasing total cost
B) decreasing fixed cost
C) decreasing average total cost
D) increasing average total cost
E) decreasing average variable cost

Question

Quizplus · Accepted Answer

Economies of scale occur when increasing the scale of production leads to a lower average total cost per unit. This is because fixed costs are spread over a larger number of units, and efficiencies are often gained with larger scale operations.

Economies of Scale Implies That Increases in the Scale of Operation