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 $1.80. 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

ABC Corp. is experiencing economies of scale because the average cost per unit decreases as the production quantity increases from 500 million to 600 million units.

Suppose That in 2010 ABC Corp