Question

Economies of scale - exist whenever long-run average costs decline as output increases.

Economies of scope - exists when the total cost of producing two products within the same firm is lower than when the products are produced by separate firms.
Cost complementarity - exists in a multiproduct cost function when the marginal cost of producing one output is reduced when the output of another product is increased; that is, when an increase in the output of product 2 decreases the marginal cost of producing output
Patents and other legal barriers - Government may grant an individual or a firm a monopoly right. Ex. City may prevent another utility company from competing against the local utility company.

Answer 1

Economies of scale refer to a situation where the average cost decreases as the level of output increases. It allows firms to achieve higher levels of production at lower costs and offer lower prices to consumers.

Step-by-step explanation:

Economies of scale refer to a situation where the average cost decreases as the level of output increases. This means that as a firm produces more units of a product, it can do so at a lower cost per unit.

This is often seen in industries like manufacturing, where larger factories can benefit from efficiencies in production and distribution.

An example of economies of scale is the production of automobiles. A car manufacturer can produce thousands of cars in a single production run, spreading the fixed costs of production, such as the cost of the factory and equipment, across a larger number of units.

This allows each car to be produced at a lower cost compared to if the manufacturer was producing a smaller number of cars.

Economies of scale are important because they allow firms to achieve higher levels of production at lower costs, which can lead to higher profits. It also allows firms to offer lower prices to consumers, which can result in increased market share and competitiveness.