Asked by Baylee Tullo on May 07, 2024
Verified
Economies and diseconomies of scale are associated with the:
A) long-run average total cost curve and the long run.
B) short-run average total cost curve and the short run.
C) marginal cost curve and both the long and short run.
D) average fixed cost curve and the short run.
Economies of Scale
The cost advantages that enterprises obtain due to their scale of operation, resulting in cost per unit of output decreasing with increasing scale.
Diseconomies of Scale
The phenomenon where production costs per unit increase as an operation scales up, typically due to inefficiencies or increased complexities.
Long-Run
The long-run refers to a period in economics where all factors of production and costs are variable, allowing all inputs to be adjusted.
- Acquire knowledge on the theories of economies and diseconomies of scale and their correlation with the cost curves.
Verified Answer
IZ
Irfan ZakariaMay 14, 2024
Final Answer :
A
Explanation :
Economies and diseconomies of scale refer to the long-run average total cost curve and the long run. As a firm increases its scale of production, it experiences economies of scale up to a certain point, where it reaches the minimum efficient scale. Beyond that, it experiences diseconomies of scale. These effects are reflected in the long-run average total cost curve.
Learning Objectives
- Acquire knowledge on the theories of economies and diseconomies of scale and their correlation with the cost curves.