Question 28
Theory of ProductionA firm is said to have benefited from external economies in production if it has realized
- A.a more efficient management of resources
- B.a better combination of factors of production
- C.reduced resource costs due to operations of other firms
- D.a higher profit level due to increased sales.
Show the answer and explanation
Answer: C (reduced resource costs due to operations of other firms)
Explanation
External economies are cost savings that come from outside the firm, from the growth of the industry or other firms around it.