A UK ceramic tile manufacturer sells 18,000 tiles each month to UK customers. It starts selling to customers in other countries, and monthly sales increase to 30,000 tiles. Its factory and machinery remain the same.
Why may the average cost of each tile fall after the manufacturer starts exporting?
The cost of the factory and machinery is spread across 30,000 tiles rather than 18,000 tiles
The extra tiles make the cost of the factory and machinery higher for each tile
The cost per tile remains the same because the factory and machinery remain the same
The extra sales make the total cost of the factory and machinery fall