An internal economy means that ________,while an external economy means that ________.
A)firm costs fall as firm output increases, firm costs fall as industry output increases
B)firm costs fall as industry output increases, firm costs fall as firm output increases
C)firm costs fall as firm output increases, firm costs rise as industry output increases
D)firm costs fall as industry output increases, firm costs rise as firm output increases

Question

Quizplus · Accepted Answer

An internal economy refers to the situation where a firm's costs decrease as its own output increases, due to efficiencies gained from scaling up production. An external economy, on the other hand, occurs when a firm's costs decrease as the total output of the industry increases, often due to factors like improved infrastructure or technology that benefit all firms in the industry.

An Internal Economy Means That ________,While an External Economy Means