Economies of scale exist if:
A)as the amount of capital increases, the cost of producing per unit rises
B)as the amount of capital increases, the cost of producing per unit falls
C)as the amount of capital increases, the marginal cost rises
D)as the amount of capital increases, the marginal physical product falls

Question

Quizplus · Accepted Answer

Economies of scale occur when increasing the amount of capital (or scale of production) leads to a decrease in the cost of producing each unit. This is because fixed costs are spread over a larger number of units, and operational efficiencies are often realized as production scales up.

Economies of Scale Exist If