Question

Economies of scale are associated with:________
a. indivisible setup costs.
b. diminishing marginal productivity.
c. zero setup costs.
d. the short run.

Answer 1

Answer:

b. diminishing marginal productivity.

Explanation:

Economies of scale means that as total output increases, the average total cost per unit decreases. This continues until a point where marginal costs will start to increase as well as average total cost per unit. In other words, marginal productivity decreases as total output increases, and at one point it will become negative.