Economies of scale exist as a firm increases its size in the long run because of all of the following except
A)the firm can afford more sophisticated technology in production.
B)labor and management can specialize even further in their tasks.
C)as a larger input buyer, the firm can purchase inputs at a lower per unit cost.
D)as a firm expands its production, its profit margin per-unit of output increases.

Question

Quizplus · Accepted Answer

Option D is incorrect because as a firm expands its production, its profit margin per unit of output may decrease due to increased competition or lower prices. The other options (A, B, and C) are correct and all contribute to economies of scale.

Economies of Scale Exist as a Firm Increases Its Size