Economies of Scale Exist When

question 89

Multiple Choice

Economies of scale exist when

• A)total cost decreases as output increases.
• B)long-run average cost decreases as output increases.
• C)marginal cost decreases as output increases.
• D)fixed cost decreases as output increases.

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Definitions:

Well-Established Firms

Companies that have been in operation for a long time and have a firm position in the market.

Interest-Rate Cost-Of-Funds

The cost incurred by financial institutions to borrow funds, which influences the interest rates they charge for loans and mortgages.

Perfectly Elastic

A situation in market economics where the quantity demanded or supplied of a good changes infinitely in response to any change in price.

Market Interest Rates

The prevailing rates at which borrowers can obtain loans and lenders can offer loans in the financial market, depending on supply and demand dynamics.