passwella.
Menu

JAMB Economics 1990 Question 8

Question 8

Theory of Costs and Revenue

Economies of scale operate only when

  1. A.marginal cost is falling with input
  2. B.average cost is falling with output
  3. C.fixed cost is variable
  4. D.variable cost is less than fixed cost
Show the answer and explanation

Answer: B (average cost is falling with output)

Explanation

Economies of scale are the savings from larger output, and they show as a falling average cost per unit.