Economies of scale are illustrated by:
A)a downward sloping long-run average cost curve.
B)a flat long-run average cost curve.
C)an upward-sloping long-run average cost curve.
D)a downward-sloping short-run average total cost curve.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that firms achieve as they increase production levels. This is illustrated by a downward-sloping long-run average cost curve, where the average cost of producing each unit decreases as output increases. This is because fixed costs can be spread over a larger quantity of output, resulting in a lower average cost per unit.

Economies of Scale Are Illustrated By