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JAMB Economics 1998 Question 12

Question 12

Theory of Costs and Revenue

When a firm is reaping economies of large-scale production, it experiences a fall in its

  1. A.long-run marginal cost
  2. B.long-run average cost
  3. C.long-run total cost
  4. D.short-run marginal cost.
Show the answer and explanation

Answer: B (long-run average cost)

Explanation

Economies of scale mean that as the firm grows, its cost per unit (long-run average cost) falls.