Question

. If a higher level of production allows workers to specialize in particular tasks, a firm will likely exhibit ___ of scale and ____ average total cost. a. Economies; falling b. Economies; raising c. Diseconomies; falling d. Diseconomies; raising

Answer 1

Answer:

a. Economies; falling

Explanation:

Economies of scale: It is referred to as the reduction in cost due to an increase in the scale of production. Due to efficient production, the company is able to gain a cost advantage. It also helps the consumer to enjoy lowering the price of goods in the market, which lead to an increase in demand for goods.

There are two types of economies of scale:

Internal economies of scale- It includes technical and efficient production, good management, efficient procurement, etc.

External economies of scale- It includes government policies, support and taxation policy.

Therefore in the given case, the firm is likely to exhibit Economies of scale and falling average total cost.