The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3

-As the confectionary, Mrs. Fields' Cookies, gained popularity in California and decided to expand its operations to Utah, it was able to achieve economies of scale. This means that:
A)property taxes were lower in its new location in Utah.
B)transport and communication systems were more developed in Utah.
C)wages were higher in Utah compared to California.
D)expansion of output and firm size led to specialization among the workers.
E)government policies were more favorable in Utah.

Question

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
 
-As the confectionary, Mrs. Fields' Cookies, gained popularity in California and decided to expand its operations to Utah, it was able to achieve economies of scale. This means that:
A)property taxes were lower in its new location in Utah. 
B)transport and communication systems were more developed in Utah. 
C)wages were higher in Utah compared to California. 
D)expansion of output and firm size led to specialization among the workers. 
E)government policies were more favorable in Utah.

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages a firm can achieve by expanding its output and firm size. One of the ways this could happen is through specialization among workers, which leads to a more efficient production process and lower per unit costs. Therefore, option D is the best choice. Options A, B, and E are not relevant to the concept of economies of scale. Option C is incorrect, as higher wages would lead to higher costs and not lower costs.

The Figure Given Below Shows Three Short Run Average Total