"Economies of scale" means that
A. the more producers there are in a country, the greater the need for retailers
B. larger countries enjoy more economic growth than smaller countries
C. as a company produces larger numbers of a particular product, the cost of each product goes up
D. as a company produces larger numbers of a particular product, the cost of each product goes down
E. smaller companies are more economical
Answer: (D) A firm can exploit "economies of scale" when it reduces its unit costs by operating at high volumes of throughput. (A) and (B) have no bearing on scale economies, so they are both incorrect. (C) is false because the unit costs actually increase when the production levels go up. (E) should be ruled out since "economies of scale" does not refer to the size of the company. The right answer is (D) since in this case unit costs decline as production levels increase.