Economies of scale are created by greater efficiency of capital and by:
A) longer chains of command in management.
B) better wages for labor.
C) smaller plant sizes.
D) increased specialization of labor.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that come with increased production. When production increases, there are more opportunities for specialization of labor. Specialization allows workers to focus on specific tasks and become more efficient at performing them, which leads to lower per unit costs. Therefore, D - increased specialization of labor - is the best choice.

Economies of Scale Are Created by Greater Efficiency of Capital