58.1k views
5 votes
Chloe’s Café sells gourmet cinnamon rolls. In the long run, the café incurs a total cost of $500 to produce 1,000 cinnamon rolls. If Chloe’s Café exhibits economies of scale between 1,000 and 2,000 cinnamon rolls, the long-run average total cost for 1,500 cinnamon rolls is a. ​lower than $0.50. b. ​higher than $500. c. ​higher than $0.50. d. ​equal to $0.50.

User Pocketsand
by
8.3k points

1 Answer

0 votes

Answer:

a. ​lower than $0.50

Step-by-step explanation:

As there is economies of scale, the cost per unit will decrease as the output increase. Because the cost for 1,000 units already is 0.50 per unit at a higher level of output 1,500 in this case; the cost per unit is forced to be lower to make the statement of economy of scale true.

User Taekni
by
7.6k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.