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Question

What is the economy of scale?

a.

The theory of economics that states that it is cheaper to produce large quantities of the same product

b.

The theory of economics that states that it is more expensive to produce large quantities of the same product

c.

The theory of economics that states that it is cheaper to produce small quantities of the same product

d.

The theory of economics that states that it is more expensive to produce small quantities of the same product

Answer: (a).The theory of economics that states that it is cheaper to produce large quantities of the same product Explanation:In a so-called economy of scale, one assumes that it is cheaper to produce large quantities of the same product. The fixed costs are then distributed over a larger number of units, which decreases the cost per unit.

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Q. What is the economy of scale?

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