Economies of scale refer to
A) a feature of short- run production functions but not long- run production functions.
B) the point at which marginal cost equals average cost.
C) the fact that, in the long run, fixed costs remain constant as output increases.
D) the range of output over which the long- run average cost falls as output increases.

Question

Quizplus · Accepted Answer

Economies of scale occur when the long-run average cost of production decreases as the scale of production increases. This means that as a company produces more, the cost per unit of production decreases, which is accurately described in option D. Options A, B, and C do not correctly describe economies of scale.

Economies of Scale Refer to