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The larger a firm, the lower its cost of production

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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 is B

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.