When a firm finds that its ATC of production decreases as it increases production,this firm is said to be experiencing:
A)profit maximization.
B)economic profit.
C)economies of scale.
D)a barrier to entry.

Question

Quizplus · Accepted Answer

Economies of scale occur when a firm's average total cost of production decreases as it increases production. This is because the firm is able to spread its fixed costs over a larger output, leading to lower costs per unit. This can lead to higher profits for the firm and can also act as a barrier to entry for new firms trying to enter the market. However, this does not necessarily mean that the firm is maximizing profits or earning economic profits.

When a Firm Finds That Its ATC of Production Decreases