Asked by neeranjali kallydeen on Apr 27, 2024
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At the current level of output, long-run marginal cost is $50 and long-run average cost is $75. This implies that:
A) there are neither economies nor diseconomies of scale.
B) there are economies of scale.
C) there are diseconomies of scale.
D) the cost-output elasticity is greater than one.
Long-Run Cost
The total cost of production when all inputs, including both fixed and variable costs, are considered fully adjustable.
Economies Of Scale
The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.
Diseconomies
Negative effects on costs that occur as a business expands, typically resulting from inefficiencies that stem from managerial and operational challenges.
- Acquire an understanding of the principle of economies of scale and its association with cost reduction techniques.
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Learning Objectives
- Acquire an understanding of the principle of economies of scale and its association with cost reduction techniques.
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