Final answer:
Costs typically decline at sustained production levels due to economies of scale, with Boeing's optimum production level being around 8,000 planes per year before reaching constant returns and then diseconomies of scale after 20,000 planes per year.
Step-by-step explanation:
Production costs typically decline at sustained production levels, especially for firms like Boeing that produce complex products such as airplanes. According to the concept of economies of scale, as a firm increases production, the average cost of each unit produced typically decreases up to a point. For Boeing, as shown in Figure 9.2 about the airplane manufacturing industry, economies of scale occur up to an output of 8,000 planes per year. Beyond this level, constant returns to scale occur up to 20,000 planes per year. However, if production exceeds 20,000 planes per year, there would be diseconomies of scale, causing costs to rise.
These production levels suggest that costs generally decline as a firm moves from initial production levels toward sustained levels where economies of scale can be realized. Thus, the approximate production levels where costs typically decline would not be at the initial stage, but at a sustained level of production where the company can take advantage of efficiencies gained through economies of scale.