-Refer to the above figure. The firm that produces an output between Q1 to Q2 is experiencing
A) constant returns to scale.
B) diseconomies of scale.
C) diminishing marginal product.
D) economies of scale.

Question

-Refer to the above figure. The firm that produces an output between Q1 to Q2 is experiencing
A) constant returns to scale. 
B) diseconomies of scale. 
C) diminishing marginal product. 
D) economies of scale.

Quizplus · Accepted Answer

When a firm experiences economies of scale, the average cost of production decreases as the quantity of output increases, which is depicted by the downward slope of the average cost curve between Q1 and Q2.

-Refer to the Above Figure