Question

Economies of scale occur when there are : (A) increases in long-run average costs when output increases.(B) no changes in long-run average costs when output increases.(C) decreases in long-run average costs resulting from increases in output.(D) decreases in output resulting from decreases in input.

Answer 1

Answer:

(C) decreases in long-run average costs resulting from increases in output.

Explanation:

Economies of scale are those where the larger the scale of operation of a company is (increases in output), the smaller the cost per unit of output is (decreases in average costs). This concept applies to a great variety of companies, and it was first developed by Adam Smith. It is also the opposite of disectomies of scale.