Question

What causes economies of scale?

Answer 1

Economies of scale exist when a firm expands its production and sees its long-run average costs decrease. ... If a firm grows larger, its costs drop, making it more profitable than smaller firms. One reason for economies of scale is specialization of labor and of machinery.

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Answer 2

Explanation:

Economies of scale exist when a firm expands its production and sees its long-run average costs decrease. ... If a firm grows larger, its costs drop, making it more profitable than smaller firms. One reason for economies of scale is specialization of labor and of machinery.