Question

Technical economies of scale refer to:

A. The cost savings achieved through efficient production processes
B. The reduction in average costs achieved by producing a larger volume of goods
C. The benefits of specialized knowledge and skills within the organization
D. The advantages gained by buying inputs in large quantities

Answer 1

Economies of scale refers to a situation where as the level of output increases, the average cost decreases.

Step-by-step explanation:

Economies of scale refers to a situation where as the level of output increases, the average cost decreases. For example, if a factory produces only 100 cars per year, each car will be quite expensive to make on average. However, if a factory produces 50,000 cars each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per car will be lower.