alleryStart learning →Economies of scale become relevant only after a firm has settled its:
AEmployee dress code
BLeast costly technology
CAdvertising budget
DShareholder register
Answer & Solution
Correct answer: B. Least costly technology
1. The order of the two decisions matters.
2. Once a firm has determined the least costly production technology, it can consider the optimal scale of production.
3. Scale is the quantity of output to produce.
4. Choosing scale before technology would mean optimising the wrong thing.
5. Economies of scale then describe how average cost behaves as that scale grows.
_Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 7 'Production, Costs and Industry Structure', sections 7.1-7.4_
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