Question

Financial intermediaries can substantially reduce transaction costs per dollar of transactions because their large size allows them to take advantage of A. economies of scale. B. standardization. C. poorly informed consumers. D. their market power.

Answer 1

Answer:

Economies of scale

Explanation:

Financial intermediaries can substantially reduce transaction costs per dollar of transactions because their large size allows them to take advantage of economies of scale.

Economies of scale refers to reduction of cost due to increase  in the production of the firm.

Economies of scale is beneficial to the companies as it help in reducing the cost. A company can improves its economies of scale by purchasing , labour , and organization.

Economies of scale by of two types they are:

Internal : It is control by internal factors of the company like management.

External : It is control by external factor of the company like government.

Economies of scale can be improve by improving technical economies of scale, by purchasing in heavy or bulk quantity .