Economies of scale are said to exist when
A)inputs are increased by some percentage and output increases by the same percentage.
B)inputs are increased by some percentage and output increases by a lesser percentage.
C)inputs are increased by some percentage and output increases by a greater percentage.
D)the LRATC curve slopes upward.

Question

Quizplus · Accepted Answer

Economies of scale exist when inputs are increased by some percentage and output increases by a greater percentage. This means that as firms increase their level of production, they are able to achieve lower costs per unit of production. This is due to a variety of factors such as specialization of labour, use of more efficient equipment, and better systems for managing resources.

Economies of Scale Are Said to Exist When