The larger a firm, the lower its cost of production This statement explains the?
ECONOMICS
WAEC 2018
The larger a firm, the lower its cost of production
This statement explains the?
- A. law of diminishing marginal returns
- B. concept of economies of scale
- C. law of comparative cost advantage
- D. theory of division of labour
Correct Answer: B. concept of economies of scale
Explanation
Economies of Scale refer to the cost advantage enjoyed by a firm when it increases its level of output. An increase in the level of output indicates the growth and expansion of a firm. This happens when costs are spread over a larger number of goods.
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