Question

If output is increased in the long run, average production costs in the presence of internal economies of scale will ________, and in the presence of external economies of scale, will ________.

Answer 1

If the output is increased in the long run, average production costs in the presence of internal economies of scale will decrease, and in the presence of external economies of scale, will decrease.

Internal economies of scale arise from factors that measure a firm's production efficiency and are controlled by management. Major changes within the industry create external economies of scale. Therefore, as the industry grows, the average cost of doing business will drop.

Internal economies of scale refer to benefits that arise within a company. For example, a larger company may be able to obtain a higher level of credit. In contrast, external savings occur within the industry rather than outside the organization, making them more efficient.

Learn more about economies here: brainly.com/question/17996535

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