Question

Economies of scale are said to exist when inputs are increased by some percentage and output increases by a(n) __________ percentage, causing unit costs to __________.
A. greater; fall
B. smaller; fall
C. greater; rise
D. smaller; rise
E. equal; fall

Answer 1

Answer:

A) greater ; fall

Explanation:

Economies of scale exist when inputs are increased by some percentage and output increase by a greater percentage causing units cost of production to fall.

Economies of scale refers to the cost advantage of an organization when it increases production output and reduces cost of production. By increasing production, more inputs are increased at a lower cost per inputs which will actually reduce the cost of production per units.

Business Organizations tend to make more profits by practicing economies of scale because of the decrease in cost of production.

The more the increase in production, the more profits firms make.

Answer 2

Answer:

A. greater; fall

Explanation:

Economies of scale are the advantages reaped by companies when they become efficient in production. Per unit cost decreases with increasing scale.

Causes of economies of scale.

1. Specialisation of labour

2. Lower per unit costs as a result of bulk buying

I hope my answer helps you