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

Question

Quizplus · Accepted Answer

While economies of scale do suggest lower unit costs as output volume increases, there is a limit to how much costs can be reduced through increased production. Eventually, inefficiencies may arise and unit costs may start to increase, leading to diseconomies of scale. Therefore, the statement that unit costs continue to fall indefinitely is false.

The Concept of Economies of Scale Suggests That Unit Costs