Which example illustrates economies of scale in the aircraft industry?

In the context of the aircraft industry, economies of scale refer to the cost advantages that a company experiences as it increases its level of production. This results in the average cost per unit decreasing as the scale of output expands. Using larger hangars is a clear illustration of this concept.

When an aircraft company utilizes larger hangars, it can accommodate more aircraft under one roof, thus optimizing the use of space and resources. This consolidation enhances efficiency because fixed costs, such as rent and maintenance of hangars, are spread over a larger number of aircraft. The reduced cost per square meter enables the company to lower its overall costs, making it a prime example of how scaling up operations can lead to significant cost savings.

The other options illustrate scenarios that do not effectively demonstrate economies of scale. Choosing smaller aircraft for flexibility relates more to operational strategy rather than cost advantages. Hiring more staff may be necessary for increased output but does not inherently reflect a reduction in average cost as it could lead to increased variable costs. Investing in outdated technologies is antithetical to the notion of improving efficiency and reducing costs, as it can lead to higher long-term expenses rather than achieving economies of scale.