Economics · Economies of Scale
Given below are two statements: one is labelled as Assertion A and the other is labelled as Reason R. Assertion A: External economies of scale are achieved when an individual firm expands its own production scale, resulting in cost advantages such as lower borrowing rates and R&D spreading. Reason R: External economies of scale arise from industry-wide cost reductions, providing benefits like a shared skilled labour pool and knowledge spillovers to all firms as the entire industry expands. In the light of the above statements, choose the correct answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both A and R are correct and R is the correct explanation of A
- 2Both A and R are correct but R is NOT the correct explanation of A
- 3A is correct but R is not correct
- 4A is not correct but R is correct✓
Correct answer
A is not correct but R is correct
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