Suppose a candy manufacturer can triple its production of fudge by doubling its production facility for making fudge. This indicates the presence of
A)constant returns to scale.
B)economies of scale.
C)diseconomies of scale.
D)market constraints.
E)the law of diminishing returns.

Question

Quizplus · Accepted Answer

The fact that the candy manufacturer can triple its production of fudge by only doubling its production facility suggests that there are economies of scale at play. Doubling the inputs (production facility) results in more than double the output (fudge production), which is characteristic of economies of scale.

Suppose a Candy Manufacturer Can Triple Its Production of Fudge