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Steve Owns a Bike Store

Question 105

Multiple Choice

Steve owns a bike store. He currently sells 1,200 bikes per year. If he doubles the size of his store so he can sell 2,400 bikes per year and his long-run average total cost per bike decreases, we know that Steve is experiencing:


A) diseconomies of scale.
B) diminishing marginal product.
C) increasing marginal product.
D) economies of scale.
E) constant returns to scale.

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