For building contractors, doubling the size of an office building does not require double the inputs because there are common walls.This is an example of
A)increasing marginal product
B)diminishing marginal returns
C)economies of scale
D)diseconomies of scale
E)constant returns to scale

Question

Quizplus · Accepted Answer

Economies of scale imply that as the size of output increases, the cost per unit of output decreases. In this case, the doubling of the office building's size does not require double the inputs, as there are common walls which can be utilized. This reduces the cost per unit of output, resulting in economies of scale.

For Building Contractors, Doubling the Size of an Office Building