Economies of scale are relevant to the __________, whereas the law of diminishing marginal returns is relevant to the __________.
A)long run; short run
B)short run; long run
C)industry; firm
D)firm; industry
E)firm in the short run; industry in the long run

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale, which is a concept relevant in the long run when all factors of production can be varied. The law of diminishing marginal returns, on the other hand, occurs when adding an additional factor of production results in smaller increases in output, a phenomenon observed in the short run when at least one input is fixed.

Economies of Scale Are Relevant to the __________, Whereas the Law