When there are economies of scale, A) MC AC, so cost-output elasticity is greater than AC. B) MC

Question

When there are economies of scale,
A) MC > AC, so cost-output elasticity is greater than AC.
B) MC < AC, so cost-output elasticity is less than AC.
C) MC < AC, so cost-output elasticity is greater than 1.
D) MC < AC, so cost-output elasticity is less than 1.
E) long-run marginal cost is declining.

Quizplus · Accepted Answer

When there are economies of scale, the marginal cost (MC) is less than the average cost (AC), and the cost-output elasticity is less than 1, indicating that costs increase at a decreasing rate as output increases.

When There Are Economies of Scale