Which concept describes the benefits gained by increasing production volume?

The concept that best describes the benefits gained by increasing production volume is economies of scale. This principle refers to the cost advantages that businesses experience when they produce goods at a larger scale. As the production volume increases, the average cost per unit typically decreases due to factors such as operational efficiencies, bulk purchasing of materials, better utilization of production capacity, and spreading fixed costs over more units.

For instance, a factory that produces 10,000 units of a product can achieve lower costs per unit than a factory producing only 1,000 units because certain costs, like machinery and facility expenses, are shared across more products. This reduction in unit costs allows businesses to offer competitive pricing, potentially boosting their market share or profit margins.

The other concepts, while relevant in their own contexts, do not specifically address the relationship between production volume and cost efficiency in the same manner. Economies of movement, for example, relate to transportation costs, while cost externalities pertain to unexpected costs that affect parties not directly involved in a transaction. Profit maximization is a broader strategy aimed at maximizing overall profits but does not specifically address the cost benefits of increased production volume.