Asked by Alyssa Neves on Mar 10, 2024



Related to the Economics in Practice on page 196. The search engine business is subject to ________, which means that as the use of the search engine increases, the long-run cost to provide additional searches on that search engine will likely fall.

A) diminishing returns
B) economies of scale
C) diseconomies of scale
D) significant government regulation

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, leading to a reduced cost per unit of output.

Search Engine

A software system designed to search for information on the World Wide Web.

Long-Run Cost

Costs that a firm incurs when all factors of production and costs are variable, not fixed, in the long term.

  • Identify the differences between economies of scale and their diseconomies.
  • Understand the impact of economies of scale on the dynamics of industries and their cost compositions.

Verified Answer

Andrew Fisher

Mar 10, 2024

Final Answer :
Explanation :
The correct answer is economies of scale. This economic principle suggests that as the production level increases, the cost per unit of production decreases. In the context of a search engine business, as more people use the search engine, the cost of providing additional searches decreases because the infrastructure and technology to support these searches become more cost-effective at larger scales.