Which term describes the economies of scale achieved when investing in machinery leads to higher productivity and lower average costs?

• A. Technical Economies of Scale
• B. Financial Economies of Scale
• C. Brand
• D. Product Range

Answer: (A)

Technical economies of scale occur when investing in machinery raises productivity and lowers average costs. Machinery makes production faster and more precise, so more units can be produced in the same time. This spreads fixed costs, like equipment, over a larger output and can reduce per-unit costs through automation and improved processes. The result is higher output at a lower cost per unit. The other ideas don’t fit this specific production efficiency: cheaper finance comes from financial economies of scale, while a strong brand or a broader product range relates to marketing and sales, not the cost advantages from new machinery.