Which of these is an example of economies of scale?

a. a shoe store finds it can increase profits by hiring high school students who are willing to work for minimum wage.

b. a ranch increases its profits by expanding from 400 to 800 cattle without buying or renting additional land.

c. a restaurant charges customers $1 a glass for water that was once provided for free.

d. an internet access company charges customers different rates for using the internet at different times of day?

Question

Business

Carlee Hensley

13 January, 21:09

Which of these is an example of economies of scale?

a. a shoe store finds it can increase profits by hiring high school students who are willing to work for minimum wage.

b. a ranch increases its profits by expanding from 400 to 800 cattle without buying or renting additional land.

c. a restaurant charges customers $1 a glass for water that was once provided for free.

d. an internet access company charges customers different rates for using the internet at different times of day?

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Answers (1)

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Bridger Barrett · Answer 1

B.

Economies of scales is defined as lower average costs due to an increase in output, therefore you must identify where output is increasing, that being the cattle. The increase in profits can be attributed to the lower costs, which increased the profit margin.