Economies of scale occur when ______.
A)production is greater than demand
B)not enough is demanded at a given price
C)the cost per unit of output decreases as the volume of output increases
D)the total cost declines as the volume of output increases

Question

Quizplus · Accepted Answer

Economies of scale refer to the phenomenon where the cost per unit of output decreases as the volume of output increases. This could be due to various factors, such as spreading fixed costs over a larger volume of production, specialization and division of labor, and other efficiencies that arise with increased volume. A and B are incorrect as they refer to conditions of excess production or low demand, which do not necessarily imply economies of scale. D is partially correct as total costs may decline with volume, but the key factor in economies of scale is the cost per unit of output.

Economies of Scale Occur When ______