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Which of the Following Could Reduce Economic Efficiency

question 64

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Which of the following could reduce economic efficiency?


Definitions:

Average Variable Cost

The total variable cost divided by the quantity of output produced; it shows the variable cost per unit of output.

Increasing Returns to Scale

A situation in production where doubling the inputs results in more than doubling the output, leading to efficiencies and economies of scale.

Decreasing Returns to Scale

A situation in which a firm experiences a less than proportional increase in output despite a proportional increase in all inputs, typically due to inefficiencies.

Increasing Opportunity Costs

The concept that as you produce more of one good, the opportunity cost of producing that next unit increases.

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