Question

4) (Economies of Scale) Suppose a firm has chosen its quantity so that its marginal cost is equal to the market price, and is making positive profits because its revenues exceed its costs. Is this firm operating in a range where it production exhibits economies of scale or diseconomies of scale

Answer 1

Answer:

The firm is operating in a product range that exhibits diseconomies of scale. A further explanation is given below.

Explanation:

• The company operates within a target area where there have been efficiency gains throughout production. Since the company makes benefits and opportunities, which means that the profitability outweighs the amount, the price could perhaps outweigh the estimated price at either the amount of development. As well as the valuation is equivalent to the cost, and marginal cost should therefore significantly increase the overall value.
• Researchers understand exactly this because when market forces are already in place, marginal cost is already below the estimated price, such that, marginal cost would be below the estimated price. After all, once government subsidies have been in place because when efficiency gains are in place, marginal cost should be above total value, which indicates that sometimes marginal cost exceeds average cost whenever economies of level have been in place.