A firm finds that producing 30,000 vases costs $180,000 and producing 40,000 vases costs $200,000. This pattern might be explained by:
A) economies of scope.
B) economies of scale.
C) diseconomies of scale.
D) diminishing marginal productivity.

Question

Quizplus · Accepted Answer

Economies of scale occur when increasing production leads to lower average costs. Here, the cost per vase decreases as production increases from 30,000 to 40,000 vases, indicating economies of scale.

A Firm Finds That Producing 30,000 Vases Costs $180,000 and Producing