2.7 The concept of economies of scale refers to lower per- unit production costs at higher levels of output. The easi- est 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 out- put rises, there are constant returns to scale. But the con- cept 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. building construction b. cloud services providers c. e-invoice versus printed invoice d. a retired couple downsizing from a 4,000 sq. ft. house to a 2,000 sq. ft. apartment e. buying a museum pass when traveling to another city
2.7 The concept of economies of scale refers to lower per- unit production costs at higher levels of output. The easi- est 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 out- put rises, there are constant returns to scale. But the con- cept 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. building construction b. cloud services providers c. e-invoice versus printed invoice d. a retired couple downsizing from a 4,000 sq. ft. house to a 2,000 sq. ft. apartment e. buying a museum pass when traveling to another city
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 21P
Related questions
Question
Help answer point A. Building Construction
![2.7 The concept of economies of scale refers to lower per-
unit production costs at higher levels of output. The easi-
est 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 out-
put rises, there are constant returns to scale. But the con-
cept 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. building construction
b. cloud services providers
c. e-invoice versus printed invoice
d. a retired couple downsizing from a 4,000 sq. ft. house to
a 2,000 sq. ft. apartment
e. buying a museum pass when traveling to another city
LI](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd3a44ac3-ba0d-4b76-bbcf-1fe02088304a%2Ff4ece079-8dfc-4ecc-88f8-e89d6bfd46c9%2F66rpdrf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2.7 The concept of economies of scale refers to lower per-
unit production costs at higher levels of output. The easi-
est 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 out-
put rises, there are constant returns to scale. But the con-
cept 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. building construction
b. cloud services providers
c. e-invoice versus printed invoice
d. a retired couple downsizing from a 4,000 sq. ft. house to
a 2,000 sq. ft. apartment
e. buying a museum pass when traveling to another city
LI
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Exploring Economics](https://www.bartleby.com/isbn_cover_images/9781544336329/9781544336329_smallCoverImage.jpg)
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
![Essentials of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337091992/9781337091992_smallCoverImage.gif)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Principles of Economics 2e](https://www.bartleby.com/isbn_cover_images/9781947172364/9781947172364_smallCoverImage.jpg)
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
![Exploring Economics](https://www.bartleby.com/isbn_cover_images/9781544336329/9781544336329_smallCoverImage.jpg)
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
![Essentials of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337091992/9781337091992_smallCoverImage.gif)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Principles of Economics 2e](https://www.bartleby.com/isbn_cover_images/9781947172364/9781947172364_smallCoverImage.jpg)
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
![Microeconomics: Private and Public Choice (MindTa…](https://www.bartleby.com/isbn_cover_images/9781305506893/9781305506893_smallCoverImage.gif)
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
![Economics: Private and Public Choice (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781305506725/9781305506725_smallCoverImage.gif)
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning