If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, what would the expansion provide to the airlines?
A)Economies of scale
B)Diseconomies of scale
C)Higher average costs but lower total costs
D)Higher marginal costs but lower total costs

Question

Quizplus · Accepted Answer

The airport's expansion will bring about economies of scale, which refers to the cost savings resulting from a larger-scale operation. The lowering of the average cost per airplane landing is a clear sign of economies of scale. These cost savings can be passed on to the airlines, resulting in lower costs for airplane landing fees, which could make the airport a more attractive destination for airlines.

If an Airport Decides to Expand by Building an Additional