Economies of size indicate that bigger businesses use management resources more efficiently than smaller ones.

• A. Bigger businesses use management resources more efficiently than smaller ones
• B. Smaller businesses use management resources more efficiently
• C. There is no difference in management efficiency by size
• D. Only marketing efficiency improves with size

Answer: (A)

Economies of size means that as a business grows, it can spread fixed costs and gain managerial specialization, so bigger firms typically use management resources more efficiently than smaller ones. With more output, the cost of administration per unit falls and specialized managers can handle different functions, improving coordination and planning. So the statement is true because size allows better use of management resources; the other ideas don’t fit because efficiency is not limited to marketing, and there is usually a difference in efficiency with size as fixed costs are spread and managers specialize, rather than no difference or smaller firms being more efficient.