The concept of economies of scale suggests that unit costs continue to fall indefmitely as output volume increases.

Question

Quizplus · Accepted Answer

Economies of scale suggest that unit costs may decrease up to a certain point as output volume increases, but eventually they will reach a minimum and then may start to increase again due to various factors such as diseconomies of scale or diminishing returns. Therefore, unit costs do not continue to fall indefinitely but rather follow a U-shaped curve.

The Concept of Economies of Scale Suggests That Unit Costs