A company that sells dairy products purchases large quantities of milk from the local dairy farms. Since the quantity purchased is very high, the company is able to demand and get price concessions from the dairy farms. The company prices its dairy products at a lower rate than its competitors. The greater quantity of products sold compensates for the low price. This is an example of

The economics of scale is one of the advantage of the cost which typically measure the total output produced by the the given operation. With the increase in the economics of scale then the per unit cost of the output gets automatically decreases.

The main goals of this economics of scale is that it developed various types of unique goods and the services so that they can attract the consumers for increase the productivity in an organization.

According to the question, the economics of scale is one of the example of given situation in which the companies start selling the products in large quantity for compensating the low prices products.

Therefore, Economics of scale is the correct answer.