When Economies of Scale Exist,a Decrease in the Level of Output

question 46

Multiple Choice

When economies of scale exist,a decrease in the level of output will lead to:

• A) a decrease in cost per unit.
• B) an increase in cost per unit.
• C) no change in cost per unit.
• D) an increase in total cost.

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Definitions:

Usage of Trade

Established practices or methods of dealing regularly observed in a particular industry or trade.

Commercially Impracticable

A condition in contractual agreements indicating that fulfilling the contract has become excessively burdensome or impossible due to unforeseen events.

Perfect Tender Rule

A legal principle requiring the seller to deliver goods in accordance with the terms exactly as specified in the contract, without any deviation.

Commercial Impracticability

A legal doctrine under which a party may be released from a contract when events render performance commercially impracticable.