A firm enjoying economies of scale is said to be
ECONOMICS
JAMB 2010
A firm enjoying economies of scale is said to be
- A. reducing average cost as production increases
- B. benefiting from the activities of other firms
- C. maximizing profits as production increases
- D. having an upward-sloping average cost curve
Correct Answer: A. reducing average cost as production increases
Explanation
As long as the Long run average cost curve is declining, then internal economies of scale are being exploited. If LRAC is falling when output is increasing, then the firm is experiencing economies of scale.
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