What is an example of the scale effect?
A) Workers choose to provide more hours of labor when the wage rate decreases.
B) The firm hires more labor as long as the marginal product of labor is positive.
C) The firm expands output when production costs fall.
D) The firm expands output when production costs increase.
E) The firm hires more labor when the wage falls because labor has become relatively cheaper compared to the price of other factors of production.

Question

Quizplus · Accepted Answer

The scale effect refers to the expansion of output due to a decrease in production costs, leading firms to increase production.

What Is an Example of the Scale Effect