Recall the Application about scale economies in the production of electricity from wind to answer the
following question(s).
-Recall the Application. Since a large or a small wind turbine have the same installation, operating and maintenance costs, but a large turbine has four times the generating capacity but costs less than three times as much as a small turbine, the wind power industry faces:
A)constant economies of scale.
B)economies of scale.
C)diseconomies of scale.
D)a hump shaped cost curve.

Question

Quizplus · Accepted Answer

Economies of scale occur when the cost per unit of output decreases as the scale of production increases. In this case, a large turbine has a higher capacity and costs less than three times as much as a small turbine, indicating that the cost per unit of electricity generated is lower for larger turbines.

Recall the Application About Scale Economies in the Production of Electricity