Answer to Question #48551 in Macroeconomics for ball

Question

Because of economics of scale, it is sometimes more cost effective for a firm to operate a large plant at less than maximum efficiency than a small plant at maximum efficiency”. Do you agree with this statement? Explain

Answer 1

Economies of scale are the cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.
It is sometimes more cost effective for a firm to operate a large plant at less than maximum efficiency than a small plant at maximum efficiency, I agree with it, but this statement can be applied only in some cases, but not for all firms.