External economies of scale will ________ average cost when output is ________ by ________.
A) reduce; increased; the industry
B) reduce; increased; a firm
C) increase; increased; a firm
D) increase; increased; the industry
E) reduce; reduce; the industry

Question

Quizplus · Accepted Answer

External economies of scale refer to the benefits that a firm or an entire industry can realize as a result of the growth of the entire industry. When output is increased by the industry, firms can take advantage of improved infrastructure, increased availability of skilled labor, and enhanced transportation networks. This leads to a reduction in average costs, which means that firms can benefit from cost savings. Therefore, external economies of scale will reduce average cost when output is increased by the industry.

External Economies of Scale Will ________ Average Cost When Output