“The larger a firm, the lower its cost of production”, this statement explains the
A. concept of economics of scale.
B. law of comparative cost advantage.
C. law of diminishing returns.
D. theory of division of labour.
QandA LiberiaTeacher
“The larger a firm, the lower its cost of production”, this statement explains the A. concept of economics of scale. B. law of comparative cost advantage. C. law of diminishing returns. D. theory of division of labour.
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A is the correct answer, most firms experience economics of scale because as the factory increases in size it produces at a lower average cost than a smaller factory. This leads to an increasing return to scale.