Question

When the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases, it is known as _____.

a. diseconomies of scale
b. capacity cushion
c. cost cushioning
d. economies of scale?

Answer 1

(d.) ECONOMIES OF SCALE

Economies of scale is achieved when the average goods and services decrease whereas the volume of the goods and services increases.
Diseconomies of scale is achieved when the average unit cost of goods and services increases with the increase in the volume of goods and services.