Microsoft Certified: Azure Fundamentals (AZ-900) Practice Exam

What economic benefit does the reduction in costs per subscriber in a public cloud demonstrate?

1. Operational expenditures

2. Consumption-based billing

3. Scalability

4. Economies of scale

The correct answer is: Economies of scale

The reduction in costs per subscriber in a public cloud illustrates the concept of economies of scale. This phenomenon occurs when the average cost of production decreases as the volume of production increases. In the context of a public cloud, as more users subscribe and utilize the services, the cloud provider can spread the infrastructure and operational costs over a larger number of subscribers. This operating model enables cloud providers to offer services at lower marginal costs as they grow their customer base. It is a direct result of having vast data centers and infrastructure that can serve numerous clients simultaneously without a proportional increase in costs. The benefits of economies of scale can lead to lower prices for consumers, making cloud services more accessible and appealing compared to on-premises solutions. For the other choices, operational expenditures typically refer to the ongoing costs associated with the day-to-day functioning of a business, but they do not directly address the cost benefits realized through increased user participation. Consumption-based billing reflects how customers are charged based on their actual usage of services; while relevant to financial models in cloud services, it does not explain the overarching benefit of reduced costs per subscriber. Scalability refers to the cloud's ability to adjust resources according to demand, but does not intrinsically define the cost reduction aspect tied to subscriber growth