Economies of scale
A) are available to small firms but not to large firms due to management inefficiencies.
B) are achieved when a firm reduces its average cost of production as it produces more.
C) can be avoided by purchasing supplies and raw materials in large quantities.
D) help explain the success of small businesses.

Question

Quizplus · Accepted Answer

Mass production can allow a firm to increase its efficiency. As production volume increases, the per-unit cost of production decreases. This is explained, in part, by the purchase of supplies and raw materials in large quantities and by labor efficiencies.

Economies of Scale