Final answer:
The correct statement about production technologies is C, as economies of scale allow firms to decrease the cost per unit with increased output, proving advantageous for large-scale production. so, option c is the correfct answer.
Step-by-step explanation:
The correct statement about production technologies is C. Large scale production is advantageous to the firm if the production technology exhibits economies of scale or increasing returns to scale. This is because economies of scale refer to the situation where, as the quantity of output increases, the cost per unit of production decreases, which is beneficial for large-scale operations such as warehouse stores like Costco or Walmart. It is a concept that applies to the long-run average cost curve when all inputs can increase together. Therefore, as firms increase output, they can reduce their average costs, making large-scale production more efficient if economies of scale are present.
Option A is incorrect as it confuses marginal cost with average cost. Economies of scale affect average costs, not necessarily marginal costs. Furthermore, in the short run, an increase in output can sometimes lead to diminishing marginal returns, where marginal costs rise as production expands. Option B is incorrect as well, because network effects are different from economies of scale, referring instead to the increased value of a product or service as more people use it. Lastly, Option D is incorrect because network effects do not describe the advantages of combining multiple firms' production technologies but rather the benefits that accrue to a product or service as its user base expands.