Question

Which of the following is not a type of pecuniary Economies of Scale?

• A. Reduction in prices of raw materials, as a result of discounts due to large volumes from the Suppliers
• B. Lower costs of external finance as banks often offer loans to large Firms at a lower rate of interest
• C. Lower advertising rates for large Firms if they advertise at large scales
• D. Economies achieved by increasing the scale of output mainly due to division of labour

Answer 1

Answer: (D)

Economies achieved by increasing the scale of output mainly due to division of labour

Economies achieved by increasing the scale of output mainly due to division of labour is not a type of pecuniary Economies of Scale.

Pecuniary Economies of Scale can be defined as a situation when lower prices are paid for the factors used in the production and distribution of the product, due to bulk-buying by the firm as its size increases.