Globalization Trends Quick Check

Question

2 of 52 of 5 Items
Question
Which of the following is an example of economies of scale?(1 point)
Responses

A business increases its production of widgets, and the total cost of production decreases.
A business increases its production of widgets, and the total cost of production decreases.

A business decreases its production of widgets, and the cost of producing each widget decreases.
A business decreases its production of widgets, and the cost of producing each widget decreases.

A business increases its production of widgets, and the cost of producing each widget decreases.
A business increases its production of widgets, and the cost of producing each widget decreases.

A business decreases its production of widgets, and the total cost of production decreases.

Answer 1

The correct answer is:

A business increases its production of widgets, and the cost of producing each widget decreases.

This option illustrates economies of scale, where increasing production leads to a lower cost per unit due to factors such as spreading fixed costs over a larger number of goods, improved operational efficiencies, and negotiating bulk discounts on materials.