Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 70,000 and 80,000 televisions. For this range of output, the firm is experiencing
A)economies of scale.
B)constant returns to scale.
C)diseconomies of scale.
D)coordination problems.

Question

Quizplus · Accepted Answer

Economies of scale occur when an increase in production leads to a decrease in the average cost of each unit produced. Since the firm's long-run average total costs decrease as it produces more televisions within the specified range, it is experiencing economies of scale.

Suppose That a Firm's Long-Run Average Total Costs of Producing