As output increases,economies of scale occur when the
A) long-run average cost increases.
B) long-run average cost decreases.
C) short-run average total cost decreases.
D) long-run average cost stays constant.
E) long-run fixed cost decreases.

Question

Quizplus · Accepted Answer

Economies of scale occur when the long-run average cost decreases as output increases. This means that the cost per unit of production decreases as the scale of production increases, due to factors such as increased specialization, investment in specialized equipment, and improved technology.

As Output Increases,economies of Scale Occur When the