A production process exhibits economies of scale if: The total cost of productio

Question

A production process exhibits economies of scale if:

The total cost of production decreases as output increases

The marginal cost of production decreases as output increases

The average cost of production decreases as output increases

The average cost of production increases as output increases

The total cost of production decreases as output increases

The marginal cost of production decreases as output increases

The average cost of production decreases as output increases

The average cost of production increases as output increases

Explanation / Answer

ANs C:

When more unit of output are produced with lesser input cost then we said economies of scale are achieved. This means that as a company grows and production units increase, a company will have a better chance to decrease its costs (average cost).

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