Question

In production are said to exist if the cost per unit of output declines as the number of units increase.

a. Absolute advantage
b. Economics of scale
c. Capital access and cost
d. Preferential government policies

Answer 1

Economies of scale refers to the situation where as the quantity of output goes up, the cost per unit goes down. This allows larger factories to produce at a lower average cost than smaller factories.

Step-by-step explanation:

Economies of scale refers to the situation where, as the quantity of output goes up, the cost per unit goes down. This means that the cost per unit of production declines as the number of units being produced increases. This concept is often seen in industries like Costco or Walmart, where larger factories can produce at a lower average cost compared to smaller factories. The larger scale of production allows these companies to take advantage of economies of scale and reduce costs.