Big Summer Pools is a relatively new company that installs residential pools. The manager has noticed that has the company continues to increase the number of pools installed, its short- run average total cost continues to fall. This information suggests that Big Summer Pools .

Question

Quizplus · Accepted Answer

The fact that the short-run average total cost is falling as the company increases the number of pools installed suggests that they are experiencing economies of scale. This means that as the company expands its operations and produces more units, its average cost of production decreases due to factors such as better utilization of resources, specialization, and lower fixed costs per unit. Therefore, it would not make sense for the company to consider reducing the scale of their operations.

Big Summer Pools Is a Relatively New Company That Installs