Answer:
The company is benefiting from Economies of Scale.
Explanation:
Economies of Scale is an economic term that describes the advantages obtained by increasing output, which reduces the average cost of production. This happens because there are fixed costs and variable costs involved in production. The fixed costs do not increase with increased production, most times. With efficiencies obtainable from increased production, the average cost per unit decreases.
Answer:
The answer is economies of scale
Explanation:
This occurs when the variable cost per unit of product declines as the more and more units of such product are produced.
Economies could result from the fact that the company using higher bargaining power is able to negotiate reduced cost of raw materials which translates reduced of variable cost of production.
It could results efficiency in the use of resources, for instance introduction of automated machine that reduce wastage by nearly hundred percent.
The would be able to do this because it has a high operation capacity.
