The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5

-All these factors can lead to economies of scale in production, except:
A)division of labor that helps in specialization.
B)merger of two firms.
C)hiring larger machines which are more efficient than the smaller ones.
D)increase in overhead expenses.
E)research and development.

Question

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5
 
-All these factors can lead to economies of scale in production, except:
A)division of labor that helps in specialization. 
B)merger of two firms. 
C)hiring larger machines which are more efficient than the smaller ones. 
D)increase in overhead expenses. 
E)research and development.

Quizplus · Accepted Answer

Increase in overhead expenses is likely to lead to diseconomies of scale, not economies of scale. The other options can lead to economies of scale in production. Division of labor can help in specialization, merger of two firms can lead to consolidation of resources, and hiring larger machines can lead to increased efficiency. Research and development can lead to product innovation and cost savings, both of which can contribute to economies of scale.

The Table Given Below Shows the Average Total Cost of Production