Asked by Boston Bragg on Jun 01, 2024
Verified
When a firm doubles its inputs and finds that its output has more than doubled, this is known as
A) economies of scale.
B) constant returns to scale.
C) diseconomies of scale.
D) a violation of the law of diminishing returns.
Economies of Scale
The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.
Diseconomies of Scale
The situation where a company or business grows so large that the costs per unit increase, leading to inefficiency.
Constant Returns to Scale
A condition in production where increasing the inputs results in a proportional increase in output.
- Master the concept of economies of scale and its effect on the long-run average total cost.
- Analyze how changes in input affect output changes in the context of economies, diseconomies, and constant returns to scale.
Verified Answer
SK
Samantha KuilanJun 05, 2024
Final Answer :
A
Explanation :
Economies of scale occur when increasing the inputs leads to a more than proportional increase in output, indicating that the firm is becoming more efficient as it grows.
Learning Objectives
- Master the concept of economies of scale and its effect on the long-run average total cost.
- Analyze how changes in input affect output changes in the context of economies, diseconomies, and constant returns to scale.