QUESTION 16

What is the difference between economies of scale and returns to scale?

Part 2

A.

Economies of scale define how cost changes with output, and returns to scale define how output changes with input usage.

B.

Economies of scale define whether joint output of a single firm is greater than output that could be achieved by two different firms when each produces a single product, and returns to scale define how output changes with input usage for a single firm.

C.

Economies of scale define how cost changes with output in the

short run, and returns to scale define how cost changes with output in the

long run.

D.

Economies of scale are present when the long-run average cost curve is

increasing, and returns to scale are present when the long-run average cost curve is

decreasing.

E.

Economies of scale are present when the expansion path is a straight line, and returns to scale are present when the expansion path is not a straight line.