Read the passage and answer the following questions:

Shilpa Rai is a 37-year old entrepreneur who grew up in a rural district of South Kannada. She was very good at art and craft, particularly wax molds. She loved to make candles. Often she makes toys and small pieces of art with wax and uses them as a gift for her friends and relatives. She is always involved in helping poor women of the area by providing them with jobs after imparting necessary skills. She believes that she is getting her work done as well as helping the needy section of society. Since it is a small business, she performs all the functions of business management herself. But she knows that the workers are not from a sound background, and they need motivation to perform efficiently and effectively. Slowly, the business is growing noticeably as the number of orders is increasing. As the orders are increasing, the production cost is declining. Based on the knowledge. and experience that Shilpa acquired in her business, she smartly handles all the critical situations.

"Slowly the business is growing as the number of orders are increasing, and the production cost is declining." Which of the following concept is causing the decrease in production cost here?

Economies of Scale

The correct answer is Option (4) → Economies of Scale

As the business expands and the number of orders increases, the average cost of production decreases because fixed costs are spread over a larger number of units. This phenomenon is known as Economies of Scale, where increased production leads to lower per-unit costs.