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Which of the following is correct regarding economies of scale?
- a)Reduction in the unit cost of distribution
- b)Reduction in the unit cost of production
- c)Reduction in the total cost of distribution
- d)Addition to the unit cost of production
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
Which of the following is correct regarding economies of scale?a)Reduc...
The correct answer is Reduction in the unit cost of production.
- Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output.
- The advantage arises due to the inverse relationship between the per-unit fixed cost and the quantity produced.
- The greater the quantity of output produced, the lower the per-unit fixed cost.
- Economies of scale also result in a fall in average variable costs (average non-fixed costs) with an increase in output.
- This is brought about by operational efficiencies and synergies as a result of an increase in the scale of production.
- Economies of scale can be realized by a firm at any stage of the production process.
- In this case, production refers to the economic concept of production and involves all activities related to the commodity.
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Community Answer
Which of the following is correct regarding economies of scale?a)Reduc...
The correct answer is Reduction in the unit cost of production.
- Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output.
- The advantage arises due to the inverse relationship between the per-unit fixed cost and the quantity produced.
- The greater the quantity of output produced, the lower the per-unit fixed cost.
- Economies of scale also result in a fall in average variable costs (average non-fixed costs) with an increase in output.
- This is brought about by operational efficiencies and synergies as a result of an increase in the scale of production.
- Economies of scale can be realized by a firm at any stage of the production process.
- In this case, production refers to the economic concept of production and involves all activities related to the commodity.
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Which of the following is correct regarding economies of scale?a)Reduction in the unit cost of distributionb)Reduction in the unit cost of productionc)Reduction in the total cost of distributiond)Addition to the unit cost of productionCorrect answer is option 'B'. Can you explain this answer?
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