Which two?

A chart of the concept of ‘economies of scale’ would have two axes.

Which two?
A . Price per unit
B . Cost per unit
C . Scale of operations
D . Economies of operation

View Answer

Answer: B, C

Explanation:

The principle of economies of scale is that cost will decrease as the scale / volume of operations in-creases. Remember that ‘cost’ is not the same as ‘price’.

See also ‘learning curve’ or ‘experience curve’. A clear mathematical ratio between volumes and cost per unit can be calculated / determined. The concept of the learning curve originated within the air-craft manufacturing sector in the United States, where engineers drew up precise cost benefits as the quantity of aircraft manufactured increased – as experience was gained.

These ideas can be very useful when negotiating price for large volumes, especially for new or be-spoke goods or services – the supplier’s costs may decrease significantly as volumes or experience increase(s).