Final answer:
Economies of scale are a business concept where increasing production typically leads to lower average costs, demonstrated by the cost differences among toaster oven production plants S, M, L, and V.
Step-by-step explanation:
The concept described in the question pertains to economies of scale, which is an important principle in business and economics. When a manufacturing plant increases its quantity of production, its average cost of production typically decreases, demonstrating economies of scale. The figures provided illustrate various production plants (S, M, L, V) that produce toaster ovens at different scales and their corresponding average costs of production.
Production plant S, with a small output of 30 units, has a higher average cost of $30 per toaster oven. Plant M produces a medium output of 50 units at an average cost of $20, showcasing a reduction in average costs. Meanwhile, Plants L and V, producing 150 and 200 units respectively, have the lowest average cost of $10 per toaster oven. The data suggests that economies of scale are maximized at a production output of 150 units, as Plant V does not achieve a lower average cost despite a higher output than Plant L.