Question

When car makers began to cut the costs of producing cars by designing the chassis, engine, and transmissions so that different models could be produced on the same assembly line, production costs fell $240 per car. Based on this information, this scenario could potentially illustrate

Answer 1

Options:

A.economies of scale.

B. diseconomies of scale.

C. constant returns to scale.

D. diminishing marginal product

Answer:A. Economies of scale.

Explanation: Economies of scale is a term used in Economics to describe the as the costs benefits and advantages that a business firm enjoys through efficient utilisation of its processes and resources.

Economies of scale is also a major advantage of large scale business organisations as it ensures that the size of manufacturing enhances their capacity to compete favourably with reduced cost due to their size and multiple stream of investments.