Reductions in minimum average costs that come about through increases in the size of plants and equipment are called
A)Barriers to entry.
B)Economies to monopoly power.
C)Economies of scale.
D)Diseconomies of entry.

Question

Quizplus · Accepted Answer

Economies of scale describe the phenomenon where increasing the scale of production leads to proportionally greater reductions in average costs. This can be achieved through a number of mechanisms, including spreading fixed costs across a larger output, benefiting from bulk discounts on inputs, and making more efficient use of specialized capital equipment. Barriers to entry are factors that make it difficult or expensive for new firms to enter a market, while economies to monopoly power describe situations where a monopolist can achieve lower costs or higher profits by virtue of having exclusive control over a market. Diseconomies of entry are not a common term in economics and do not relate directly to the concept of economies of scale.

Reductions in Minimum Average Costs That Come About Through Increases