Madison owns a boxing gym. She recently expanded the size of her gym by adding another boxing ring and moving into a larger building so that she can serve more clients. How would Madison know if she is experiencing economies of scale from increasing the size of her boxing gym?

Question

Quizplus · Accepted Answer

Economies of scale occur when increasing production leads to a lower average cost per unit. If Madison's average cost per client decreases after expanding, it indicates she is experiencing economies of scale.

Madison Owns a Boxing Gym