The concept of economies of scale refers to lower per-unit production costs at higher levels of output.

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The concept of economies of scale refers to lower per-unit production costs at higher levels of output. The easiest 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 output rises, there are constant returns to scale, but the concept 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. aircraft production

b. satellite television providers

c. ebooks versus printed books

d. a retired couple downsizing from a 4,000 sq. ft. house to a 1,500 sq. ft. condo

e. buying a season pass to an amusement park.

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