WAEC Economics 2017 Objective — Question 17

Question 17 of 50 from the West African Examinations Council (WAEC) Economics 2017 Objective paper, with the correct answer and a full explanation.

When a firm is enjoying internal economies of scale, its total cost of production is increasing as output increases because

A. A. average fixed cost is rising continuously
B. B. average cost of production decreases as output increasesCorrect
C. C. average revenue and marginal revenue are decreasing
D. D. all of the above

Explanation

Internal economies of scale are advantages that accrue to a firm as a result of expansion — its average cost of production decreases as output increases.

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