Question

The U.S. beer industry is characterized by market power for only a few firms, with the largest firm enjoying a 50% market share. One reason for this is economies of scale. Economies of scale means that:
a. as beer production increases, costs increase significantly.
b. patents have allowed beer producers to have low costs of production.
c. as beer production increases, the average total cost of production falls.
d. if the industry were made perfectly competitive, the costs of production would fall.

Answer 1

Answer:

C : . as beer production increases, the average total cost of production falls.

Explanation:

Economies of scale applies to large firms or firms that employ large volumes of productive resources like land , labor and capital. Due to their financial strength they are able to produce in bulk, hence cost per unit falls.