A Firm Decreases Its Scale of Operation and Discovers That

question 30

Multiple Choice

A firm decreases its scale of operation and discovers that its long-run average costs decrease.Which of the following does this indicate?

• A) Labor's marginal product has increased.
• B) Diseconomies of scale were absent in the larger plant.
• C) The firm's scale initially was so large that it experienced diseconomies of scale.
• D) The firm's scale initially was too small to experience economies of scale.
• E) Its long-run marginal cost was smaller with the larger plant than with the smaller plant.

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