Answered You can hire a professional tutor to get the answer.

QUESTION

Why is it that when small firms get bigger (increase their scale), they frequently see their average total costs decrease?

Why is it that when small firms get bigger (increase their scale), they frequently see their average total costs decrease?

Economies of scale are said to exist when average total cost decreases as output increases. Economies of scale primarily arise because as output increases, the production can be divided up into ever increasingly specialized tasks. But what kinds of countervailing forces might be at work to increase average cost as output increases?

Show more
LEARN MORE EFFECTIVELY AND GET BETTER GRADES!
Ask a Question