Suppose that just by doubling the amount of output that it produces each year, a firm s per-unit production costs fall by 30 percent. This is an example of: a. technological advance. b. the demand factor. c. economies of scale. d. improved resource allocation.

Question

Business

Hailee Allen

24 September, 22:12

Suppose that just by doubling the amount of output that it produces each year, a firm s per-unit production costs fall by 30 percent. This is an example of: a. technological advance. b. the demand factor. c. economies of scale. d. improved resource allocation.

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Answers (2)

Know the Answer?

Geovanni Prince · Answer 1

The Correct Option is "Economies of scale"

Explanation:

Economies of scale:

Economies of scale explain the reduction in per unit production costs caused by expansion of production. If a economy doubles its output each year causes the production costs to reduce by 30 percent, then it is an example of economies of scale.

Barbara Nolan · Answer 2

Answer: Economies of scale.

Explanation:

Economies of scale is the saving in costs that is gained as a result of an increase in production level. It is the cost advantage that an organization experiences due to its increase in the level of output. The benefit occurs as a result of the inverse relationship that exists between quantity produced and per-unit fixed cost. The higher the quantity of output that is produced, the smaller the per unit fixed cost.

Economies of scale also brings about a reduction in the average variable costs when output increases. This is due to operational efficiencies which occurs as the scale of production increases. When the output is doubled, the reduction in costs by thirty percent is an example of economies of scale.