Economies of scale are primarily increased by ________.
A) strict industrial standards
B) knowledge retention rates
C) major quality modifications
D) higher units of production

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that companies can achieve by increasing their production output. As a company produces more units of a product or service, its fixed costs (such as rent, salaries, and equipment) are spread out over a larger number of units, which can lead to lower costs per unit. Therefore, the primary factor that increases economies of scale is higher units of production. Strict industrial standards, knowledge retention rates, and major quality modifications may also have an impact on production efficiency and costs, but they are not the primary drivers of economies of scale.

Economies of Scale Are Primarily Increased by ________