Implicit costs divided by output. Explicit costs divided by output. Total cost m
ID: 1223286 • Letter: I
Question
Implicit costs divided by output. Explicit costs divided by output. Total cost minus variable cost. Total cost minus total variable cost divided by output. Diseconomies of scale exist over the range of output for which the long-run average constant. falling, rising. none of these. Economies of scale can be caused by all of the following except: price discounts for large scale purchases labor specialization use of more productive equipment increases in the firm's average total cost more cost-efficient method of marketing. At the point where marginal cost equals average variable cost. B and c marginal cost is rising. Average total cost is at its minimum.Explanation / Answer
Question 7.
Economies of scale are said to be accruing when long-run average cost of production falls as output is increased.
There are primarily two reasons behind the occurence of economies of scale -
1. As firm increases its scale of production or produces larger output, it become possible for firm to use more specialized and efficient form of all factors as well as processes.
2. When the scale of operations is increased and the amount of labour and other factors becomes larger, introduction of a great degree of division of labor or specialization becomes possible and as a result the long-run cost per unit declines.
Thus, options (1), (2), (3), and (5) indeed contribute towards economies of scale and thus are incorrect answers.
As stated above, economies of scale accrue when there is fall in average total cost as output is increased.
So, if firm's average total cost is increasing then firm is not experiencing the economies of scale. In fact, it is experiencing the diseconomies of scale.
Hence, the correct answer is option (4).