Question

globalization trends quick check
which of the following is an example of economies of scale? (1 point)
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 decreases 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.

Explanation:

Economies of scale refer to the cost advantage when production volume increases, reducing the average (per - unit) cost. Option A: Decreasing production and per - unit cost decrease doesn't fit. Option C: Total cost decrease with lower production isn't economies of scale (total cost can decrease with less production for other reasons, not scale - related). Option D: Total cost decreasing with more production is not the definition (average cost, not total cost, is key for economies of scale). Only Option B has increased production and decreased per - unit cost, matching economies of scale.

Answer:

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