Use the figure below to answer the following question.

Figure 11.4.3
-Refer to Figure 11.4.3 which shows a firm's long-run average total cost curve. An increase in production from Q₁ to Q₂ sweaters per day produces
A)the minimum efficient scale.
B)economies of scale.
C)diseconomies of scale.
D)constant total costs.
E)constant returns to scale.

Question

Use the figure below to answer the following question.
  
Figure 11.4.3
-Refer to Figure 11.4.3 which shows a firm's long-run average total cost curve. An increase in production from Q₁ to Q₂ sweaters per day produces
A)the minimum efficient scale. 
B)economies of scale. 
C)diseconomies of scale. 
D)constant total costs. 
E)constant returns to scale.

Quizplus · Accepted Answer

An increase in production from Q₁ to Q₂ that results in a decrease in the average total cost indicates economies of scale, where the firm becomes more efficient as it increases production.

Use the Figure Below to Answer the Following Question