Exhibit 6-14 Cost curves

-In Exhibit 6-14,economies of scale only exist for output levels up to:

Question

Exhibit 6-14 Cost curves
 
-In Exhibit 6-14,economies of scale only exist for output levels up to:

Quizplus · Accepted Answer

Economies of scale exist when there is a decreasing average cost as the output level increases. From the graph, it can be observed that economies of scale exist up to an output level of 2,000 units as the average cost decreases from $40 to $30. Beyond an output level of 2,000 units, the average cost starts to increase, indicating diseconomies of scale.

Exhibit 6-14 Cost Curves