Asked by
Ricky Rivas
on Nov 04, 2024
Verified
A delivery company lowers its automobile insurance costs as it increases in size because as the size of the fleet of delivery trucks increases, the premium per driver decreases substantially. This is an example of
A) constant returns to scale.
B) diseconomies of scale.
C) economies of scale.
D) diminishing marginal returns.
Automobile Insurance Costs
The expenses related to insuring a car against accidents, theft, and other risks.
Economies of Scale
Cost advantages reaped by companies when production becomes efficient, as the cost per unit of output decreases with increasing scale.
- Evaluate the contributing factors towards the realization of economies of scale.
Verified Answer
EP
Learning Objectives
- Evaluate the contributing factors towards the realization of economies of scale.