Question

In the long run the local coffee shop incurs total costs of $625 when output is 1,250 cups of coffee and $750 when output is 1,500 cups of coffee. for this range of output, the coffee shop exhibits

a. economies of scale.

b. diseconomies of scale.

c. efficient scale.

d. constant returns to scale.

Answer 1

In the long run the local coffee shop incurs total costs of $625 when output is 1,250 cups of coffee and $750 when output is 1,500 cups of coffee. for this range of output, the coffee shop exhibits constant returns to scale. This term refers to a company that changes their inputs that it will directly relate to an increase in production.