Asked by TANIE ETIENNE on Jun 10, 2024
Verified
If your long-run costs exhibit increasing returns to scale,securing big orders leads you to
A) Increase average costs
B) Reduce average costs
C) Keep the average costs constant
D) None of the above
Increasing Returns To Scale
See Economies of scale.
- Familiarize oneself with the idea of economies and diseconomies of scale.
- Comprehend the impact of scale returns on the expenses incurred over an extended period.
Verified Answer
CS
Cassandra SaucedoJun 13, 2024
Final Answer :
B
Explanation :
Increasing returns to scale means that as production increases, the cost per unit decreases. Therefore, securing big orders would lead to further cost reductions and reduction in average costs.
Learning Objectives
- Familiarize oneself with the idea of economies and diseconomies of scale.
- Comprehend the impact of scale returns on the expenses incurred over an extended period.
Related questions
A Manufacturing Company That Benefits from Lower Costs Per Unit ...
Buffalo Aircraft Doubles the Amount of All of the Inputs ...
The Ability to Lower the Average Costs of Production as ...
It Is Common in Large Breweries for the Long-Run Average ...
Diseconomies of Scale Stem Primarily from the Difficulties in Managing ...