2.7 The concept of economies of scale refers to lower per- unit production costs at higher levels of output. The easi- est way to understand this is to look at whether long-run average cost decreases with output (economies of scale) or whether long-run average cost increases with output (diseconomies of scale). If average cost is constant as out- put rises, there are constant returns to scale. But the con- cept of falling unit costs is all around us. Explain how the concept of economies of scale helps shed light on each of the following: a. building construction b. cloud services providers c. e-invoice versus printed invoice d. a retired couple downsizing from a 4,000 sq. ft. house to a 2,000 sq. ft. apartment e. buying a museum pass when traveling to another city
2.7 The concept of economies of scale refers to lower per- unit production costs at higher levels of output. The easi- est way to understand this is to look at whether long-run average cost decreases with output (economies of scale) or whether long-run average cost increases with output (diseconomies of scale). If average cost is constant as out- put rises, there are constant returns to scale. But the con- cept of falling unit costs is all around us. Explain how the concept of economies of scale helps shed light on each of the following: a. building construction b. cloud services providers c. e-invoice versus printed invoice d. a retired couple downsizing from a 4,000 sq. ft. house to a 2,000 sq. ft. apartment e. buying a museum pass when traveling to another city
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.9P
Related questions
Question
Help answer point A. Building Construction
![2.7 The concept of economies of scale refers to lower per-
unit production costs at higher levels of output. The easi-
est way to understand this is to look at whether long-run
average cost decreases with output (economies of scale)
or whether long-run average cost increases with output
(diseconomies of scale). If average cost is constant as out-
put rises, there are constant returns to scale. But the con-
cept of falling unit costs is all around us. Explain how the
concept of economies of scale helps shed light on each of
the following:
a. building construction
b. cloud services providers
c. e-invoice versus printed invoice
d. a retired couple downsizing from a 4,000 sq. ft. house to
a 2,000 sq. ft. apartment
e. buying a museum pass when traveling to another city
LI](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd3a44ac3-ba0d-4b76-bbcf-1fe02088304a%2Ff4ece079-8dfc-4ecc-88f8-e89d6bfd46c9%2F66rpdrf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2.7 The concept of economies of scale refers to lower per-
unit production costs at higher levels of output. The easi-
est way to understand this is to look at whether long-run
average cost decreases with output (economies of scale)
or whether long-run average cost increases with output
(diseconomies of scale). If average cost is constant as out-
put rises, there are constant returns to scale. But the con-
cept of falling unit costs is all around us. Explain how the
concept of economies of scale helps shed light on each of
the following:
a. building construction
b. cloud services providers
c. e-invoice versus printed invoice
d. a retired couple downsizing from a 4,000 sq. ft. house to
a 2,000 sq. ft. apartment
e. buying a museum pass when traveling to another city
LI
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