If there are no fixed costs in the long run,how can it be said that economies of scale arise from spreading fixed costs over more units of output?
A) Economies of scale is a short run phenomenon,and so diminishing returns is the root cause of scale economies.
B) It is instead the cost of quasi-fixed inputs that gets spread over more units of output which drives down average cost in the long run.
C) Average fixed costs decline continuously as output rises.
D) Long-run average cost falls because all fixed costs are sunk.

Question

If there are no fixed costs in the long run,how can it be said that economies of scale arise from spreading fixed costs over more units of output? 
A) Economies of scale is a short run phenomenon,and so diminishing returns is the root cause of scale economies.
B) It is instead the cost of quasi-fixed inputs that gets spread over more units of output which drives down average cost in the long run.
C) Average fixed costs decline continuously as output rises.
D) Long-run average cost falls because all fixed costs are sunk.

Quizplus · Accepted Answer

In the long run, there are no fixed costs, but there may be quasi-fixed costs associated with certain inputs such as machinery or buildings. By spreading the cost of these inputs over more units of output, the average cost per unit decreases, leading to economies of scale. Therefore, it is the cost of quasi-fixed inputs, not fixed costs, that drives down average cost in the long run.

If There Are No Fixed Costs in the Long Run,how