If a firm experiences lower costs per unit as it increases production in the long run, this is an example of:
A) economies of scale.
B) diseconomies of scale.
C) increasing opportunity costs.
D) scale reduction.

Question

Quizplus · Accepted Answer

Economies of scale refer to the decrease in average cost per unit as the scale of production increases in the long run. This is usually due to spreading fixed costs over a larger output, utilizing more efficient technology, and improved specialization of labor.

If a Firm Experiences Lower Costs Per Unit as It