Large businesses can afford to advertise in the mass media which reduces average cost per person.

• A. Marketing Economies of Scale
• B. Purchasing Economies of Scale
• C. Financial Economies of Scale
• D. Administrative Economies

Answer: (A)

This question tests marketing economies of scale. Advertising in mass media is a fixed cost—the expense is incurred regardless of how many items are sold. As a business increases its output and sales, that fixed advertising cost can be spread over a larger number of units or people reached, so the average cost per unit (or per person) falls. Large firms can afford to pay for broad campaigns, making the per-person cost lower as volume rises.

The other types of economies don’t describe this effect. Purchasing economies come from cheaper input costs by buying in bulk, financial economies come from better borrowing terms, and administrative economies come from spreading overheads more broadly. The scenario specifically highlights the cost-reduction from spreading a fixed marketing expense over more units, which is why marketing economies of scale is the best fit.