Question

Which of the following is not a reason why firms experience economies of scale?

Answer 1

Answer:

The correct answer is letter "D": As output increases, the managers can begin to have difficulty coordinating the operations of their firms.

Explanation:

Economies of scale mean that production becomes more efficient as the number of goods being produced increases. In most cases, companies that achieve economies of scale lower the average cost of their products by increasing production. In economies of scale, the cost of each product can depend on the size of the industry or the size of an individual company. The larger the number of products being manufactured does not necessarily imply the most difficult the companies' operations become.