It is common in large beer breweries for the long-run average total cost to decline as output increases.This indicates that many breweries operate under:
A)diseconomies of scale.
B)diminishing marginal returns.
C)economies of scale.
D)constant returns to scale.

Question

Quizplus · Accepted Answer

The scenario described is consistent with economies of scale, which occur when the cost per unit of output decreases as production volume increases due to factors such as specialization, increased bargaining power with suppliers, and spreading fixed costs over a larger output level. In contrast, diseconomies of scale occur when the cost per unit of output increases as production volume increases, while constant returns to scale occur when the cost per unit of output remains constant regardless of the scale of production. Diminishing marginal returns, while related to economies of scale, refer to the decrease in incremental output that results from adding more units of a variable input, rather than the long-run average cost of production.

It Is Common in Large Beer Breweries for the Long-Run