**Understanding Scale in Production**A certain amount of output can be produced by many small plants or one large plant. The large plant produces at a lower minimum average cost than the small plants. This long-run situation reflects:- ○ economies of scale.- ○ diseconomies of scale.- ● constant returns to scale.- ○ diminishing returns.In economic terms, the concept of "economies of scale" is highlighted when a larger production facility can produce goods at a lower cost per unit than smaller facilities. This is typically due to factors such as increased efficiency, better utilization of resources, and spreading fixed costs over more units. The correct option in this context is "economies of scale," although the image incorrectly highlights "constant returns to scale." Understanding these concepts is critical for studying how businesses can grow efficiently and reduce production costs in the long term.

A certain amount of output can be produced by many small plants or one large plant. The large plant produces at a lower minimum average cost than the small plants. This long-run situation reflects O economies of scale. O diseconomies of scale. constant returns to scale. O diminishing returns.

A certain amount of output can be produced by many small plants or one large plant. The large plant produces at a lower minimum average cost than the small plants. This long-run situation reflects O economies of scale. O diseconomies of scale. constant returns to scale. O diminishing returns.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Cost of Production

The entire idea of the cost of production or production cost is applied corresponding, or we can say that it is related to monetary cost. Money cost refers to any money expenditure which the firm or supplier, or producer undertakes in purchasing or hiring factor of production or factor services.

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**Understanding Scale in Production**

A certain amount of output can be produced by many small plants or one large plant. The large plant produces at a lower minimum average cost than the small plants. This long-run situation reflects:

- ○ economies of scale.
- ○ diseconomies of scale.
- ● constant returns to scale.
- ○ diminishing returns.

In economic terms, the concept of "economies of scale" is highlighted when a larger production facility can produce goods at a lower cost per unit than smaller facilities. This is typically due to factors such as increased efficiency, better utilization of resources, and spreading fixed costs over more units. The correct option in this context is "economies of scale," although the image incorrectly highlights "constant returns to scale." Understanding these concepts is critical for studying how businesses can grow efficiently and reduce production costs in the long term.

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