The scale economies index (SCI) is equal to:
A) the cost-output elasticity.
B) one minus the cost-output elasticity.
C) 100 times the degree of economies of scope (SC).
D) marginal cost divided by average cost.

Question

Quizplus · Accepted Answer

The scale economies index (SCI) is defined as one minus the cost-output elasticity. This means that as output increases, the SCI will decrease if costs are increasing less than proportionally to output (economies of scale), and the SCI will increase if costs are increasing more than proportionally to output (diseconomies of scale). Therefore, B is the correct answer.

The Scale Economies Index (SCI) Is Equal To