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:

Option A – economies of scale

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.