A decrease in the long-run average costs resulting from increasing output is referred to as
A) diseconomies of scale.
B) constant return to scale.
C) a scale invariant process.
D) economies of scale.

Question

Quizplus · Accepted Answer

Economies of scale refer to the decrease in long-run average costs resulting from increasing output. When a firm produces at a larger scale, it can take advantage of cost savings that come with increased efficiency and lower per-unit costs of production. This results in a decrease in average costs, hence, economies of scale.

A Decrease in the Long-Run Average Costs Resulting from Increasing