McqMate
| Q. |
If an industry is characterized by economies of scale then - |
| A. | barriers to entry are not very large |
| B. | long run unit costs of production decreases as the quantity the firm produces increases |
| C. | capital requirement are small due to the efficiency of the large scale operation |
| D. | the costs of entry into the market are likely to be substantial |
| Answer» B. long run unit costs of production decreases as the quantity the firm produces increases | |
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Explanation: In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase. |
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