Choice "B" is correct. The theory of economies of scale states that, as a production process gets larger, the process becomes more efficient and productivity increases. The theory of diminishing returns is the opposite of economies of scale in that it holds that, as more product is produced, the factory gets less productivity out of its workforce and machinery. Factors contributing to economies of scale include:

• Labor specialization

• Managerial specialization

• Utilization of by products (or joint products)

• Efficient use of capital equipment

• Volume discount purchasing

Choices "d", "a", and "c" are incorrect, per above explanation.