When the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases, it is called ____
A)Economies of scale
B)Diseconomies of scale
C)Cost cushioning
D)A nonphysical constraint

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that a company can achieve by increasing the level of production. When the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases, it is a clear indication that the company is experiencing economies of scale. This means that the company is able to take advantage of increased efficiency and lower production costs as it grows, leading to greater profitability.

When the Average Unit Cost of a Good or Service