If economies of scale are present,then:
A)Average variable costs are falling but average fixed costs are constant.
B)Average costs are constant.
C)Average costs are decreasing.
D)Average costs are increasing.

Question

Quizplus · Accepted Answer

Economies of scale refer to a situation where the average cost of production decreases as the production volume increases. Therefore, the best choice is C, which states that average costs are decreasing. Option A is not correct because economies of scale result in both variable and fixed costs per unit decreasing. Option B is incorrect since average costs should decrease with economies of scale. Option D is inaccurate as average costs should decrease as production volume rises.

If Economies of Scale Are Present,then