Question

When a firm experiences economies of​ scale When a firm experiences economies of​ scale, A. increasing output will lead to lower average costs..'

Answer 1

A) Increasing output will lead to lower average costs

Step-by-step explanation:

Economics of Scale:

Refers to the idea of "As the output quantity production increases, the long run average cost per unit decreases".

Example:

Company A is large and produces 2 million perfumes per week and company B is small and produces 5 thousand perfumes per week. The average cost of producing 1 perfume for company A will be much lower than that of company B. This is due to

a) Buy in bulk (company A buys more that's why it costs less)

b) Technological aspect ( Company A uses more cost effective methods of production)

c) Managerial expertise