Suppose a bakery is currently producing 1,500 loaves of bread per day using 20 workers and 80 units of capital.After hiring five more workers and twenty additional units of capital,the firm's output increases by 600 loaves per day.This change exhibits:
A)increasing marginal product of labor.
B)constant returns scale.
C)economies of scale.
D)diminishing marginal product of labor.

Question

Quizplus · Accepted Answer

Economies of scale occur when an increase in inputs leads to a more than proportional increase in output. Here, the increase in inputs (workers and capital) results in a significant increase in output, indicating economies of scale.

Suppose a Bakery Is Currently Producing 1,500 Loaves of Bread