Minneapolis business Rogue Chocolatier sells specialty chocolate bars with a high cocoa content. If Rogue's average total cost decreases as the business increases plant size, then Rogue experiences:
A) Economies of scale.
B) Diseconomies of scale.
C) Diminishing marginal returns.
D) Constant returns to scale.

Question

Quizplus · Accepted Answer

If Rogue's average total cost decreases as the business increases plant size, it indicates that the cost per unit of chocolate decreases as production increases. This is due to economies of scale that come with increased production, such as bulk purchasing of materials, more efficient use of machinery, and specialization of labor. Therefore, the best choice is A.

Minneapolis Business Rogue Chocolatier Sells Specialty Chocolate Bars with a High