Economies of Scale Are Reductions in Average

question 22

Multiple Choice

Economies of scale are reductions in average

• A)Total cost that result from declining average fixed costs.
• B)Fixed cost that result from reducing the firm's scale of operations.
• C)Total cost that result from using operations of larger size.
• D)Fixed cost resulting from improved technology and production efficiency.

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Definitions:

ATC

Stands for Average Total Cost, which is the total cost of production (fixed plus variable costs) divided by the number of units produced.

Economic Profits

A reiteration emphasizing the calculation that includes total revenues minus total costs, where total costs consider both the explicit and implicit costs.

Competitive Price-searcher Market

A market structure where firms have some degree of market power, enabling them to set prices above marginal cost, but must consider competitor prices to attract consumers.

Product Diversity

The variance in products and services offered by companies or available in a market, aiming to cater to different consumer preferences.