If, when a firm doubles all its inputs, its average cost of production decreases, then production displays
A)diminishing returns.
B)economies of scale.
C)diseconomies of scale.
D)declining fixed costs.

Question

Quizplus · Accepted Answer

Economies of scale occur when a firm's average cost of production decreases as it increases its scale of production or doubles all its inputs. This can be due to various reasons such as specialization, bulk purchasing, and efficient use of resources. Diminishing returns occur when a firm increases its inputs while holding some inputs fixed, leading to a reduction in marginal productivity. Diseconomies of scale occur when a firm's average cost of production increases as it increases its scale of production or doubles all its inputs. Declining fixed costs are a result of spreading a fixed cost over a larger number of units, leading to a decrease in average fixed cost.

If, When a Firm Doubles All Its Inputs, Its Average