Economies of scale means that
A) the average fixed cost curve slopes downward over its entire range.
B) the four-firm concentration ratio is below 80.
C) the long-run average total cost curve slopes downward over it entire range.
D) the long-run total cost curve slopes downward over it entire range.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantage that arises from an increase in the scale of production. As the scale of production increases, the long-run average total cost (LRATC) curve slopes downward, indicating lower average costs per unit of output. This occurs due to various factors such as specialization, managerial efficiencies, and bulk purchasing discounts. Therefore, option C is the correct choice as it accurately describes the concept of economies of scale. The other options are incorrect as they do not reflect the definition of economies of scale.

Economies of Scale Means That