Economies of Scale Exist as a Firm Increases Its Size

question 17

Multiple Choice

Economies of scale exist as a firm increases its size in the long run because of all of the following except

• A)the firm can afford more sophisticated technology in production.
• B)labour and management can specialise even further in their tasks.
• C)as a larger input buyer, the firm can purchase inputs at a lower per unit cost.
• D)as a firm expands its production, its profit margin per unit of output increases.

---

Definitions:

Going Prices

Going prices refer to the current rates or charges for goods and services in a market.

Utility Function

A mathematical representation of how different quantities of goods or services can provide varying levels of satisfaction or utility to an individual.

Labor Income

Earnings obtained from employment, including wages, salaries, and benefits.

Gross Demands

The total quantity of goods or services demanded across all consumers in the market before accounting for net effects such as substitution or income changes.