Question

Specialization and trade can _____ the per unit cost of production because _____ . decrease; it allows for more small-scale production increase; it requires more expensive, specialized equipment decrease; it creates economies of scale associated with large-scale production increase; more expensive labor is needed

Answer 1

Answer: Option (C) is correct.

Explanation:

Economics of scale is defined as the cost advantages that a country is achieving by increasing their production and lowers their per unit cost.

This is due to the spread of costs over a large number of products which results in lower per unit cost.

Most of the large companies able to produce more by distributing their cost over a large number of goods.

Specialization also give rise to lower per unit cost because specialization of factors of production boosts the production volume of a company and lower per unit cost of production also results from the bulk orders received from the customers, means trade increases.