Economies of scale refers to when:
In the long run when average total cost does not depend on the quantity of output, this is called:
Commodities:
We assume that in the long run in a perfectly competitive market:
Homework Answers
Answer : 1) The answer is option D.
When quantity increase, if long-run average total cost decrease then the situation is called increasing returns to scale. Increasing returns to scale is also known as economies of scale. Therefore, option D is correct.
2) The answer is option C.
If quantity does not depend on long-run average total cost then the situation is called constant returns to scale. Constant returns to scale is also known as constant economies of scale. Therefore, option C is correct.
3) The answer is option B.
Commodities are a special standardized goods and homogeneous. No matter who are producing commodities. As options A, C and D are correct hence the answer is option B.
4) The answer is option B.
In perfectly competitive market in long-run many firms enter or exit from the market. This is an assumption of perfectly competitive market. Therefore, option B is correct.
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cash to cover all the costs involved with running the business, and
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