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JAMB Economics 2001 Question 17

Question 17

Theory of Costs and Revenue

Internal economies of scale are expected to bring about

  1. A.an increase in short-run average cost
  2. B.an increase in long-run average cost
  3. C.a decrease in long-run average cost
  4. D.a decrease in short-run average cost
Show the answer and explanation

Answer: C (a decrease in long-run average cost)

Explanation

Internal economies of scale are the savings a firm gets as it grows larger, which lower its long-run average cost.