Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is Group of answer choices exploiting the economies of scale available to it. facing constant returns to scale not using the available technology efficiently. facing diseconomies of scale

Question

Sariah Foster

Business

28 July, 23:29

Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is Group of answer choices exploiting the economies of scale available to it. facing constant returns to scale not using the available technology efficiently. facing diseconomies of scale

+5

Answers (1)

Know the Answer?

Alivia Church · Answer 1

Firm is exploiting Economies of Scale

Explanation:

Economies of Scale refers to the cost saving advantages (cost reduction), that firms experience due to increasing scale of production level.

Returns to scale just signifies that : when all inputs increase in same proportion; the output increase with - same proportion (constant returns), or lesser proportion (decreasing returns), or higher proportion (increasing returns).

In the given case : the inputs have not increased, the output has doubled. So, this illustrates Economies of scale. As, the firm has experienced cost advantages in production, simultaneous to increasing (doubling) production level.