If a company has significant economies of scale in the long run-assuming a large market -the company will tend to
A)grow larger and have a declining average cost curve.
B)become smaller and have a declining average cost curve.
C)grow larger and have a rising average cost curve.
D)become smaller and have a rising average cost curve.

Question

Quizplus · Accepted Answer

When a company has significant economies of scale in the long run, it means that as it increases its production, it will experience decreasing average costs. This is because the fixed costs are spread over a larger quantity of output, resulting in lower average costs per unit. As the company grows larger, it will continue to benefit from economies of scale and its average cost curve will decline. Therefore, the correct answer is A.

If a Company Has Significant Economies of Scale in the Long