Explanation
This is the core concept of economies of scale. When a company increases
its production, it can spread fixed costs (like rent, salaries, and
machinery) over more units, reducing the cost per unit. This allows
them to offer lower prices to customers.
Here’s a breakdown of the other options:
o Prices of cloud servers and services are always going down:
While this is often true, it’s not directly related to economies of scale.
The price decrease might be due to technological advancements or
increased competition.
o Big companies don’t need to make a profit on every sale: This
is true, but it’s not the primary benefit of economies of scale. The
focus is on reducing costs per unit.
Big companies don’t need to make a profit on the first
product they sell you, because they will make a profit on
the second: This is a strategy some companies use, but it’s not
directly related to economies of scale.
o Therefore, the most accurate answer is that economies of
scale lead to lower costs per unit as you increase productio
Explanation
This is the core concept of economies of scale. When a company increases
its production, it can spread fixed costs (like rent, salaries, and
machinery) over more units, reducing the cost per unit. This allows
them to offer lower prices to customers.
Here’s a breakdown of the other options:
o Prices of cloud servers and services are always going down:
While this is often true, it’s not directly related to economies of scale.
The price decrease might be due to technological advancements or
increased competition.
o Big companies don’t need to make a profit on every sale: This
is true, but it’s not the primary benefit of economies of scale. The
focus is on reducing costs per unit.
Big companies don’t need to make a profit on the first
product they sell you, because they will make a profit on
the second: This is a strategy some companies use, but it’s not
directly related to economies of scale.
o Therefore, the most accurate answer is that economies of
scale lead to lower costs per unit as you increase productio