A firm notices that when it increases output beyond an initial level $Q _ { 1 }$ , average total cost decreases. For this firm, the region of output beyond $Q _ { 1 }$ is characterized by
A) economies of scale.
B) diseconomies of scale.
C) constant economies of scale.
D) the minimum efficient scale.

Question

Quizplus · Accepted Answer

When a firm experiences a decrease in average total cost as it increases output beyond a certain level, it is experiencing economies of scale. This means the firm is able to take advantage of increased efficiency and lower costs as it produces more output.

A Firm Notices That When It Increases Output Beyond an Initial