In the long run a company that produces and sells laundry detergent incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units. For this range of output, the laundry detergent company exhibits
A)economies of scale.
B)constant returns to scale.
C)diseconomies of scale.
D)efficient scale.

Question

Quizplus · Accepted Answer

The average cost per unit decreases as output increases from 1,250 to 1,500 units, indicating economies of scale.

In the Long Run a Company That Produces and Sells