Long-Run Economies of Scale Exist When the Long-Run Average Cost

question 102

Multiple Choice

Long-run economies of scale exist when the long-run average cost curve

• A) rises.
• B) remains constant.
• C) falls.
• D) does not exist.

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Definitions:

Output

refers to the total amount of goods or services produced by a firm, industry, or economy within a certain period.

Profit-Maximizing Rule

A principle stating that profit maximization occurs when a firm expands output until marginal cost is equal to marginal revenue.

MR = MC

The condition for profit maximization in economic theory, where marginal revenue (MR) equals marginal cost (MC).

Economic Profit

The discrepancy across total turnover and total spendings, including expenses both explicit and implicit.