Figure 13-6
The following figure depicts average total cost functions for a firm that produces automobiles.

-Refer to Figure 13-6. At levels of output less than P, the firm experiences
A)economies of scale.
B)diseconomies of scale.
C)constant returns to scale.
D)both diminishing marginal productivity and coordination problems.

Question

Figure 13-6
The following figure depicts average total cost functions for a firm that produces automobiles.  ​
​
​
-Refer to Figure 13-6. At levels of output less than P, the firm experiences
A)economies of scale. 
B)diseconomies of scale. 
C)constant returns to scale. 
D)both diminishing marginal productivity and coordination problems.

Quizplus · Accepted Answer

At levels of output less than P, the firm experiences economies of scale, which means that as production increases, the cost per unit of output decreases. This is typically due to factors such as spreading fixed costs over more units, operational efficiencies, and volume discounts on inputs.

Figure 13-6 the Following Figure Depicts Average Total Cost Functions for a for a Firm