If a Firm's Average Total Costs Decrease as It Increases

question 11

Multiple Choice

If a firm's average total costs decrease as it increases its scale of production,the firm is experiencing

• A) economies of scale.
• B) diseconomies of scale.
• C) increasing returns from specialization.
• D) diminishing marginal product.
• E) constant returns to scale.

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Definitions:

Exchange Rate

The rate at which one currency can be exchanged for another.

Japanese Yen

The official currency of Japan, used as a medium of exchange in the country.

Comparative Advantage

The ability of an individual or group to produce a good or service at a lower opportunity cost than other producers.

Opportunity Cost

The cost of missing out on the next best alternative when making a decision.