Economies of scale are the same as
A)decreasing returns to scale.
B)increasing returns to scale.
C)constant returns to scale.
D)diminishing marginal returns.
E)increasing marginal product of labor.

Question

Quizplus · Accepted Answer

Economies of scale refer to the phenomenon where increasing production leads to a decrease in average cost per unit. This is known as increasing returns to scale, as the firm is able to take advantage of cost efficiencies and spread fixed costs over a larger output. Decreasing returns to scale occur when increasing production leads to an increase in average cost per unit, constant returns to scale occur when increasing production has no effect on average cost per unit, and diminishing marginal returns occur when adding one more unit of input leads to a decrease in output. The increasing marginal product of labor refers to the phenomenon where adding one more unit of labor leads to an increase in output.

Economies of Scale Are the Same as