The economies-of-scale curve is a long-run average cost curve, because
A) it allows all factors of production to change.
B) fixed costs cannot be changed.
C) only variable costs are allowed to change.
D) only marginal costs are allowed to change

Question

Quizplus · Accepted Answer

Economies of scale occur when increasing production leads to lower average costs in the long run, which is possible because all factors of production (e.g., labor, capital) can be adjusted in the long run, unlike in the short run where some factors are fixed.

The Economies-Of-Scale Curve Is a Long-Run Average Cost Curve, Because