In an industry where firms experience internal scale economies, the long-run cost of production will depend on

Question

Quizplus · Accepted Answer

The long-run cost of production in an industry where firms experience internal scale economies depends on the size of the market. As the market size increases, individual firms can produce more output, which leads to lower average costs of production. This is because fixed costs can be spread over a larger output, resulting in economies of scale. Therefore, the size of the market is a critical factor that determines the long-run cost of production in industries with internal scale economies.

In an Industry Where Firms Experience Internal Scale Economies, the Long-Run