Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

10. The Costs of Production

Average Total Cost: Short Run and Long Run

Microeconomics

10. The Costs of Production

Average Total Cost: Short Run and Long Run

Previous problem

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Multiple Choice

If a higher level of production allows workers to specialize in particular tasks, a firm will likely exhibit and __ average total cost.

Economies of Scale; Falling

Economies of Scale; Rising

Diseconomies of Scale; Falling

Diseconomies of Scale; Rising

Previous problem

Verified step by step guidance

Understand the concept of Economies of Scale: This occurs when increasing production leads to a lower cost per unit due to factors like specialization, bulk buying, and more efficient use of resources.

Recognize that specialization allows workers to become more skilled at their tasks, increasing efficiency and productivity, which typically leads to lower costs.

Identify that when a firm experiences Economies of Scale, the average total cost of production decreases as the scale of production increases.

Consider the relationship between production scale and average total cost: If specialization leads to increased efficiency, the average total cost should fall.

Conclude that the correct answer is 'Economies of Scale; Falling' because specialization in tasks typically results in reduced average total costs as production scales up.