Question

Cooperation, as a form of external economies of scale, refers 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 gained by an industry as a whole through collaborative efforts and shared resources
D. The advantages of specialized knowledge and skills within the organization

Answer 1

Cooperation as a form of external economies of scale refers to the collective benefits industries gain through shared efforts and resources, resulting in reduced average costs.

Step-by-step explanation:

Cooperation, as a form of external economies of scale, refers to C. The benefits gained by an industry as a whole through collaborative efforts and shared resources. External economies of scale occur when firms within the same industry collaborate or participate in a larger network that leads to a reduction in average costs, beyond what a single company could achieve on its own. For example, industries can benefit from shared infrastructure, research, and development, or collective purchasing power. Warehouse stores like Costco or Walmart demonstrate economies of scale by operating on a large scale, which reduces their cost per unit compared to smaller stores. Similarly, when companies work together to share resources or knowledge, the average costs for all involved parties can decrease, which is an aspect of external economies.