If the typical firm in an industry is experiencing economies of scale,
A)short-run equilibrium cannot exist.
B)some firms exit the industry.
C)industry expansion occurs.
D)long-run equilibrium is achieved.
E)firms need to divest and become smaller.

Question

Quizplus · Accepted Answer

When a typical firm in an industry experiences economies of scale, it means that as the firm increases its production, the average cost of producing each unit decreases. This often leads to industry expansion because firms can produce more at a lower cost, making the industry more attractive for both existing firms and potential new entrants.

If the Typical Firm in an Industry Is Experiencing Economies