Suppose the demand for corn increases while at the same time the supply of corn also increases. As a result, the equilibrium pri
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Answer: Scale Economies
Explanation:
Scale Economies or Economies of scale refers to a situation whereby a company stands to save more on costs if it produces more goods and services. The more they produce, the more they save.
Riverside Ranger logo T-shirts take $15,000 to set up and that is a set cost.
After that, it will cost $5,000 to make every 1,000 units per design.
The Marginal cost = 5,000/1,000 = $5
Total Cost is the initial cost + the marginal cost per unit.
Total Cost = $15,000 + 5Q
Average Cost =
<em>Therefore as Quantity increases, Average cost will decrease showing Scale Economies. </em>