Question

A situation in which the average cost of production falls as the producer grows larger is called

Answer 1

Economies of scale refer to the situation where the cost per unit decreases as the quantity of output increases. This means that as a producer grows larger, their average cost of production falls.

Step-by-step explanation:

Economies of scale refers to the situation where, as the quantity of output goes up, the cost per unit goes down. This means that as a producer grows larger, their average cost of production falls. A good example of this is the retail industry, where larger stores like Costco or Walmart can buy in bulk and benefit from lower average costs compared to smaller stores.