Which of the Following Is a Characteristic of Economies of Scale

question 24

Multiple Choice

Which of the following is a characteristic of economies of scale?

• A)The average cost declines as output increases
• B)The average cost increases as output increases
• C)The average cost remains constant as output increases
• D)The average costs are cheaper when a firm produces a wider variety of goods
• E)The average cost curve takes the form of a U-shape

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Definitions:

Linear Demand Curve

A graphical representation showing how the quantity demanded of a good or service varies with its price, typically depicted as a straight line on a graph.

Consumer Surplus

The difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay, reflecting consumer benefit.

Market Price

The present rate at which a product or service can be purchased or sold on the market.

Downward-Sloping Demand

A market situation in which the quantity demanded of a good or service decreases as its price increases, depicting an inverse relationship between price and demand.