Due to extremely large fixed costs, an electricity generating plant probably experiences which of the following returns to size?
A) diseconomies of scale
B) diminishing marginal product
C) constant returns to scale
D) economies of scale

Question

Quizplus · Accepted Answer

Due to the large fixed costs of building and operating an electricity generating plant, the average cost per unit of electricity generated decreases as output increases, leading to economies of scale.

Due to Extremely Large Fixed Costs, an Electricity Generating Plant