Consider the following information about baseball production at Bob's Baseball Factory:

Bob pays all his workers the same wage,and labor is his only variable cost.From this information we can conclude that Bob's average variable cost decreases

Question

Consider the following information about baseball production at Bob's Baseball Factory:

Bob pays all his workers the same wage,and labor is his only variable cost.From this information we can conclude that Bob's average variable cost decreases

Quizplus · Accepted Answer

Based on the graph, Bob's average variable cost decreases as output rises from 0 to 26, but then starts to increase as output continues to rise. This implies that Bob experiences economies of scale up until a certain point (at an output of 26), after which he experiences diseconomies of scale. Therefore, option B is the best choice.

Consider the Following Information About Baseball Production at Bob's Baseball