a firm is planning to increase output in the long run from 100 units to 200 units. the long run average total cost falls from $25 to $20. what can be said about this level of output?

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04-11-2022
Business

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a firm is planning to increase output in the long run from 100 units to 200 units. the long run average total cost falls from $25 to $20. what can be said about this level of output?

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Qwdeer Qwdeer · Answer 1 · 2022-11-15T08:17:27-05:00

In this question, the long-run average total cost decreases as output increases, So, the firm is experiencing economies of scale.

The term 'economies of scale' refers to situations when long-run average costs decrease as production increases. There is no industry that illustrates economies of scale better than that of chemicals.

A firm's average cost per unit of production decreases as its size or scale increases, a phenomenon known as economies of scale.

Natural monopolies are examples of this type. It is most efficient to have one company. A complex product such as an automobile can be manufactured at economies of scale. There are several complex steps involved in the manufacturing process.

To Learn more about economies of scale:

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