Asked by Alyssa Everett on May 03, 2024
Verified
If long-run average total cost decreases as the quantity of output increases, the firm is experiencing
A) economies of scale.
B) diseconomies of scale.
C) coordination problems arising from the large size of the firm.
D) fixed costs greatly exceeding variable costs.
Long-run Average Total Cost
The per-unit cost of production when all inputs, including those typically fixed, can be varied, showing economies of scale if downward sloping.
Economies of Scale
Cost advantages reaped by companies when production becomes efficient, as the average cost of production falls with increasing output.
- Perceive the intricacies of economies of scale, diseconomies of scale, and constant returns to scale.
Verified Answer
AF
alexa forteMay 10, 2024
Final Answer :
A
Explanation :
Economies of scale occur when long-run average total cost decreases as the quantity of output increases, indicating that the firm becomes more efficient as it produces more.
Learning Objectives
- Perceive the intricacies of economies of scale, diseconomies of scale, and constant returns to scale.