Economies of scale exist whenever long-run average costs
A)increase as output is increased.
B)decrease as output is increased.
C)remain constant as output is increased.
D)none of the statements associated with this question are correct.

Question

Quizplus · Accepted Answer

Economies of scale refer to the phenomenon where the long-run average costs decrease as the output is increased. This is due to the spreading of fixed costs over a larger output and the ability to negotiate better prices for inputs in bulk quantities. Therefore, option B is the correct choice.

Economies of Scale Exist Whenever Long-Run Average Costs