The larger a firm, the lower its cost of production
This statement explains the?
- law of diminishing marginal returns
-
concept of economies of scale
- law of comparative cost advantage
- theory of division of labour
The correct answer is: B
Explanation
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.