In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when output is 2,900 candy bars. The candy bar company exhibits
A)diseconomies of scale because total cost is rising as output rises.
B)diseconomies of scale because average total cost is rising as output rises.
C)economies of scale because total cost is rising as output rises.
D)economies of scale because average total cost is falling as output rises.

Question

Quizplus · Accepted Answer

The average total cost decreases from $0.50 per candy bar ($1,200/2,400) to approximately $0.48 per candy bar ($1,400/2,900), indicating economies of scale.

In the Long Run a Company That Produces and Sells