Is It Possible for a Firm to Experience Both Economies

question 55

Essay

Is it possible for a firm to experience both economies of scale and diminishing marginal product at the same time? Explain.

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Definitions:

Implicit Costs

The opportunity costs of resources that are owned by the firm and used in production, not involving direct payment of money but affecting the firm's profitability.

Explicit Costs

Direct payments made to others in the course of running a business, such as wages, rent, and materials.

Accounting Profits

The net earnings of a company as calculated by subtracting total expenses from gross revenue, according to accepted accounting principles.

Economic Profit

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs, reflecting the financial gain exceeding the opportunity cost of resources used.