If economies of scale exist for a particular production relationship, long-run average costs will
A)rise.
B)fall.
C)first rise and then fall.
D)be unaffected since there is no direct relationship between the two.

Question

Quizplus · Accepted Answer

Economies of scale mean that as production increases, the average cost of production decreases. This is because fixed costs are spread over more units, and there are opportunities for specialization and efficiency gains. Therefore, long-run average costs will fall with economies of scale.

If Economies of Scale Exist for a Particular Production Relationship