A chart of the concept of 'economies of scale' would have two axes. Which two?
A.
Price per unit
B.
Cost per unit
C.
Scale of operations
D.
Economies of operation
The Answer Is:
B, C
This question includes an explanation.
Explanation:
Explanation
The principle of economies of scale is that cost will decrease as the scale / volume of operations in-creases. Remember that 'cost' is not the same as 'price'.
See also 'learning curve' or 'experience curve'. A clear mathematical ratio between volumes and cost per unit can be calculated / determined. The concept of the learning curve originated within the air-craft manufacturing sector in the United States, where engineers drew up precise cost benefits as the quantity of aircraft manufactured increased - as experience was gained.
These ideas can be very useful when negotiating price for large volumes, especially for new or be-spoke goods or services - the supplier's costs may decrease significantly as volumes or experience increase(s).
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