What effect do economies of scale have on pricing schedules?

The correct choice highlights that economies of scale lead to a reduction in prices as production quantities increase. Economies of scale refer to the cost advantage that arises when producers increase their level of output. As production scales up, the fixed costs, such as administrative expenses, overhead, and equipment costs, are spread over a larger number of goods, effectively lowering the cost per unit.

With increased volume, suppliers can also negotiate better pricing for raw materials and benefit from improved operational efficiency, which further contributes to reduced costs. Consequently, businesses can pass these savings onto customers in the form of lower prices when they order larger quantities. This principle is vital for companies aiming to optimize their pricing strategies, as it can lead to more competitive pricing in the marketplace and increased sales volume.

The other options do not reflect the effects of economies of scale accurately. While increasing costs per unit, unpredictable costs, and eliminating fixed pricing options may occur in different business contexts, they do not align with the fundamental economic principle that greater production leads to lower costs per unit due to efficiencies gained.