A firm that is able to more efficiently utilize by-products as it increases production in the long run is an example of:
A) economies of scale.
B) diseconomies of scale.
C) labor-intensive production.
D) capital-intensive production.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages a firm experiences as it increases its scale of production. As the firm produces more, it is able to spread its fixed costs (such as machinery and equipment) over a larger output, resulting in lower average total costs. In this case, by being able to efficiently utilize by-products as production increases, the firm is able to further lower its costs and achieve economies of scale.

A Firm That Is Able to More Efficiently Utilize By-Products