Economies of scale yield
A)declining average cost as output increases
B)declining marginal cost as output increases
C)declining total cost as output increases
D)diminishing average returns as output increases
E)increasing marginal revenue as output increases

Question

Quizplus · Accepted Answer

Economies of scale occur when the average cost of producing a good or service decreases as the quantity produced increases. This is typically due to spreading fixed costs (e.g. rent, equipment, salaries) over a larger output. As a result, the larger scale of production allows for more efficient use of resources and results in lower average costs per unit.

Economies of Scale Yield