Josephina owns a boxing gym.She recently expanded the size of her gym by adding another boxing ring and moving into a larger building so that she can serve more clients.How would Josephina know if she is experiencing economies of scale from increasing the size of her boxing gym?

Question

Quizplus · Accepted Answer

If Josephina is experiencing economies of scale, her average cost per client should decrease as her gym size and client base increases. This is because she can spread her fixed costs (such as rent, utilities, and equipment) over a larger number of clients, resulting in lower average costs per client. Therefore, the best choice is D - her average cost per client decreases.

Josephina Owns a Boxing Gym