If a refinery achieves a reduction in cost by purchasing and transporting crude oil in large quantities, it enjoys
A. economies of scale B. specialization C. division of labour D. diseconomies of scale
Correct Answer: A
Explanation
Economies of scale is a proportionate saving in costs gained by an increased level of production. This means that, a firm begin to enjoy certain benefits such as a reduction in its direct and overhead cost as its scale of transaction and operation expands.