If an increase in the size of a factory results in reductions in minimum average costs,this is known as:
A) Marginal cost pricing.
B) Diminishing marginal returns.
C) Rising average total cost.
D) Economies of scale.

Question

Quizplus · Accepted Answer

The situation described is known as economies of scale, which means that as output increases, the cost per unit decreases due to factors such as specialization, more efficient use of resources, and increased bargaining power with suppliers. This is in contrast to diminishing marginal returns, which refers to the situation where the addition of one more unit of input results in a smaller increase in output. Marginal cost pricing and rising average total cost are not applicable to the given scenario.

If an Increase in the Size of a Factory Results