Asked by Lionell Martin Jr on May 06, 2024
Verified
Refer to Figure 13-6. At levels of output less than P, the firm experiences
A) economies of scale.
B) diseconomies of scale.
C) constant returns to scale.
D) both diminishing marginal productivity and coordination problems.
Economies of Scale
Cost advantages that enterprises obtain due to their scale of operation, characterized by a reduction in average cost per unit when output is increased.
Diseconomies of Scale
The phenomenon where production costs per unit increase as the volume of output increases.
Constant Returns to Scale
A situation in economics where increasing the inputs in production proportionately increases the output.
- Absorb the teachings on economies of scale, diseconomies of scale, and constant returns to scale.
- Examine visual data and tabulations to understand an organization's expense variations with distinct output levels.
Verified Answer
CM
Christina MoralesMay 08, 2024
Final Answer :
A
Explanation :
At levels of output less than P, the firm experiences economies of scale, which means that as production increases, the cost per unit of output decreases. This is typically due to factors such as spreading fixed costs over more units, operational efficiencies, and volume discounts on inputs.
Learning Objectives
- Absorb the teachings on economies of scale, diseconomies of scale, and constant returns to scale.
- Examine visual data and tabulations to understand an organization's expense variations with distinct output levels.