Question

Margaret owns a stuffed animal shop. At first, it is just her daughter Allison and her hand‑sewing stuffed bears, stuffed sharks, and stuffed giraffes in the spare bedroom. Over time, Margaret decides to rent a larger shop and hire more workers to help out, increasing to a staff of 20 people. Everything is still hand sewn. She notices, however, that her stuffed animal output increased much more than tenfold despite her work force increasing by that amount. However, any more than 20 workers slows down production.

A. Increased average cost.
B. Alternative production technologies
C. Economies of scale
D. Increasing marginal productivity

Answer 1

Answer:

correct option is C. Economies of scale

Explanation:

we know here that Margaret expend his business by 20 more people

so we can say according to given this is Economies of scale because

Economies of scale is cost advantage that the business can be exploit by the expand scale of production in long run

and effect is reducing long run average cost of production over the range of output and lower cost is improvement of productive efficiency

it can feed in form of lower market prices

they give  business competitive advantage in the market and lead to lower price but high profit

so we can say correct option is C. Economies of scale