Suppose that in 2012 ABC Corp. produced 500 million units of a good at an average cost of $2, and in 2013 ABC Corp. expanded its plant capacity and produced 600 million units at an average cost of $1.80. In this range, one can conclude that ABC Corp. is experiencing

Question

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The decrease in the average cost per unit with an increase in production indicates economies of scale. As ABC Corp. expanded its plant capacity and produced more units, it was able to benefit from reduced average costs due to the efficient use of resources and cost savings.

Suppose That in 2012 ABC Corp