Economies of Scale Are Present When

question 97

Multiple Choice

Economies of scale are present when

• A)the LRAC curve slopes downward.
• B)average total cost remains constant as input increases.
• C)average total cost rises as output increases.
• D)the LRAC curve is horizontal.
• E)total fixed cost increases.

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Definitions:

Economic Profit

The disparity between total sales and the combined total of explicit and implicit costs.

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit, determined by the point where marginal cost equals marginal revenue.

Purely Competitive Market

Describes a theoretical market structure featuring many buyers and sellers of a homogeneous good or service, with no single party able to manipulate prices due to the absence of market control.

Cost Data

Information about the expenses incurred in the production of goods or services.