Question

Integration or joint ventures, as a form of external 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 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

Integration or joint ventures in economies of scale involve industries collaborating and sharing resources, resulting in decreased average costs as output scales up.

Step-by-step explanation:

Integration or joint ventures, as a form of external economies of scale, refer to C. The benefits gained by an industry as a whole through collaborative efforts and shared resources. Economies of scale are a concept within the field of Production, Costs, and Industry Structure that implies that as the scale of output increases, the average costs of production tend to decrease up to a certain point.

This phenomenon is beneficial not just within a single organization but can also extend to collaborative efforts between different entities, such as through joint ventures or market integrations, leading to enhanced competition and variety. An example of economies of scale can be seen in how a production plant producing a larger quantity of toaster ovens incurs a lower average cost of production per unit compared to a smaller operation.