Asked by Laura Elizabeth on Sep 24, 2024
Verified
When there are economies of scale,
A) per-unit costs increase as output increases
B) per-unit costs decrease as output increases
C) per-unit costs are constant as output increases
D) output does not affect per-unit costs
Economies of Scale
Cost benefits that companies achieve because of their large scale of operations, generally resulting in a lower cost per output unit as the scale increases.
Per-Unit Costs
The average cost for each individual unit of product produced, taking into account all fixed and variable expenses.
- Comprehend the association between economies of scale, diseconomies of scale, and the behavior of long-run cost curves.
Verified Answer
ES
Elena Sheridan3 days ago
Final Answer :
B
Explanation :
Economies of scale refer to the phenomenon where per-unit costs decrease as the quantity of output increases. This happens because fixed costs (e.g., rent, machinery) are spread over a larger number of units, resulting in a lower per-unit cost. As output expands, firms can also take advantage of bulk discounts on inputs, specialized machinery, or division of labor, further reducing costs. Therefore, choice B is the best option.
Learning Objectives
- Comprehend the association between economies of scale, diseconomies of scale, and the behavior of long-run cost curves.
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