Suppose there are economies of scale in the production of a specialised memory chip that is used in manufacturing microwaves.This suggests that the microwave industry is a decreasing-cost industry.

Question

Quizplus · Accepted Answer

Economies of scale means that as the production volume of a good increases, the cost per unit of production decreases. In a decreasing-cost industry, as the production increases, the cost of production decreases, which is consistent with economies of scale. Therefore, the given scenario suggests that the microwave industry is a decreasing-cost industry.

Suppose There Are Economies of Scale in the Production of a Specialised