Suppose that in 2010 ABC Corp. produced 500 million units of a good at an average cost of $2, and in 2011 ABC Corp. expanded its plant capacity and produced 600 million units at an average cost of also $2. In this range, one can conclude that ABC Corp. is experiencing:
A)economies of scale.
B)diseconomies of scale.
C)neither economies of scale or diseconomies of scale.
D)diminishing marginal product.

Question

Quizplus · Accepted Answer

Since the average cost remains constant as production increases, ABC Corp. is experiencing constant returns to scale, which means neither economies nor diseconomies of scale.

Suppose That in 2010 ABC Corp