Question

The cost to manufacture one unit of Rinker Audio Products' bestselling hearing aid, the Magnifier, is $87.50. The CFO of the company, Neha Patel, has determined that if the company expands the output of its biggest U.S. plant by 20 percent, the unit cost would be only $82.50. The concept that as plant output expands, unit costs decrease, is known as

a. minimum efficient scale.
b. lean production.
c. Six Sigma.
d. economies of scale.
e. total quality management.

Answer 1

d. economies of scale

Step-by-step explanation:

Based on the information provided within the question it can be said that this concept is known as an economy of scale. Like mentioned in the question this concept states that as a company scales their operation, the cost of each input unit decreases as their output or production increases, Thus granting the company a cost advantage. As is happening in this scenario.