Question

13. As output (plant size) increases, economies of scale occur when the A) long-run average cost increases. B) long-run average cost decreases. C) short-run average total cost decreases. D) long-run average cost stays constant 14. Economies of scale can occur as a result of which of the following? A) increasing marginal costs as the firm increases its size B) higher fixed cost as the firm increases its size C) management difficulties as the firm increases its size D) greater specialization of labor and capital as the firm increases its size 15. Diseconomies of scale is often the result of A) Increasing fixed costs B) difficulties of coordinating and controlling a large enterprise. C) specialization of labor, capital, and management. D) technological progress.

Answer 1

13.Economies of scale cause the long run average cost to fall with rise in output, because firms become more efficient in production.

Answer-B.

14.Economies of scale is the result of greater specialisation and division of labour.

Answer-D

15.Diseconomies of scale is the result of poor management,lack of communication, difficulty in coordination which raises the average cost of production.

Answer-B