If output is increased in the long run,average production costs in the presence of internal economies of scale will _ ,and in the presence of external economies of scale,will .
A)increase; remain constant
B)decrease; remain constant
C)decrease; decrease
D)remain constant; increase
E)increase; decrease

Question

Quizplus · Accepted Answer

In the presence of internal economies of scale, average production costs decrease as output increases due to efficiencies gained within the firm. With external economies of scale, average costs decrease as the industry grows, benefiting all firms.

If Output Is Increased in the Long Run,average Production Costs