The production of cigarettes is highly automated; however,a worker is required to monitor each machine.Machines and workers do not interact with one another.Given this information,there are most likely
A) economies of scale.
B) economies of scope.
C) constant returns to scale.
D) increasing returns to scale.

Question

Quizplus · Accepted Answer

The fact that the production of cigarettes is highly automated and does not involve interaction between machines and workers suggests that there may be some economies of scale at play. However, the requirement for a worker to monitor each machine implies that there may be limits to how much production can be scaled up without also increasing the number of workers. This suggests that the production process may be subject to constant returns to scale, where increasing the scale of production by a certain percentage leads to an equivalent increase in output, without any significant changes in the factors of production required to achieve that output level.

The Production of Cigarettes Is Highly Automated; However,a Worker Is