Recall the Application about the manufacture of fake killer whales used to scare sea lions off the Washington coast to answer the following question(s).
-Recall the Application. If a fake killer whale to be used to scare sea lions away from steelhead and other threatened and commercially valuable species cost $11,000 for the mold and $5,000 for materials for each fake killer whale made, then the producer would face
A) increasing returns to scale.
B) decreasing returns to scale.
C) increasing average total costs.
D) decreasing demand.

Question

Quizplus · Accepted Answer

The producer would face increasing returns to scale because the cost of producing each additional fake killer whale decreases as the number of fake killer whales produced increases.

Recall the Application About the Manufacture of Fake Killer Whales