Question

Economies of scale exist when the_____ Group of answer choices total cost of production falls as the output increases. cost of producing a unit of a good falls as its output decreases. cost of producing a unit of a good falls as its output increases. firm uses specialized resources to produce a range of goods and services.

Answer 1

Answer:

Cost of producing a unit of a good falls as its output increases.

Explanation:

Companies achieve economies of scale when their production costs per unit decrease as the company uses fewer inputs to produce one unit of product.

For example, a company produces 10,000 units with a total cost of $20,000 (cost of producing one unit is $2). If the company increases its total production to 15,000 units with a total cost of $25,000 (cost of producing one unit is $1.67).