Related to the Economics in Practice on page 197. Which of the following represents a situation in which a school is experiencing economies of scale?
A) Student enrollment increases by 30 percent and average total cost increases by 50 percent.
B) Student enrollment increases by 50 percent and average total cost increases by 20 percent.
C) Student enrollment increases by 25 percent and average total cost decreases by 10 percent.
D) Student enrollment increases by 30 percent and average total cost does not change.

Question

Quizplus · Accepted Answer

Economies of scale occur when an increase in output leads to a decrease in average total cost. In option C, as student enrollment increases, the average total cost decreases, indicating economies of scale.

Related to the Economics in Practice on Page 197