Economies of scale occur when:
A)long-run average total costs rise as output increases
B)average fixed costs are falling
C)long-run average total costs fall as output increases
D)average fixed costs are constant

Question

Quizplus · Accepted Answer

Economies of scale occur when long-run average total costs fall as output increases. This is because as production increases, firms can spread their fixed costs over a larger output, resulting in a lower cost per unit produced. Additionally, larger firms may be able to negotiate better deals on raw materials and machinery, further contributing to lower costs per unit.

Economies of Scale Occur When