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WAEC Economics 2018 Question 18

Question 18

Theory of Production

"The larger a firm, the lower its cost of production". This statement explains the

  1. A.law of diminishing average returns.
  2. B.concept of economics of scale.
  3. C.law of comparative cost advantage.
  4. D.theory of division of labour.
Show the answer and explanation

Answer: B (concept of economics of scale.)

Explanation

Lower unit cost from a larger size is economies of scale.