A firm has a total cost function of C(Q)= 50 + 10Q^1/2.The firm experiences: A) economies of scale. B) constant returns to scale. C) diseconomies of scale. D) All of the statements associated with this question are correct, depending on the quantity.

Question

Quizplus · Accepted Answer

Economies of scale occur when increasing production leads to a lower average cost per unit. The given cost function C(Q) = 50 + 10Q suggests that as quantity (Q) increases, the total cost increases linearly, but the fixed cost (50) becomes spread out over more units, reducing the average cost per unit. This indicates economies of scale.

A Firm Has a Total Cost Function of C(Q)= 50