Answer
- Economies of scale
The statements express a relationship between efficiency, costs, and total production. When combined together, the statements describe how efficiency increases and costs decrease when the total amount of production increases. This is the definition for economies of scale. Comparative advantage relates to how some individuals and entities can be far more efficient at specific activities. Since specific activities aren’t mentioned in the statement, Choice A must be incorrect. The law of demand relates to how the demand for a good decreases as price increases. The statements discuss the cost of production, not price, so Choice C is incorrect. Similarly, Choice D is incorrect because the law of supply relates to how the supply of a good increases as its price increases.
The statements below most directly refer to which economic principle?
The chemical reaction that Frank is running for his chemistry lab is not moving fast enough to detect any changes. He decided to add ____ to the reaction to detect the change faster.
- Comparative advantage
- Economies of scale
- Law of demand
- Law of supply
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