- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 5. Understanding Economies and Diseconomies of Scale
CFA Practice Question
A firm exhibits economies of scale ______.
B. along the increasing portion of the long-run average cost curve (LRAC)
C. exactly where LRAC reaches its minimum point
D. anywhere along the LRAC, as long as increasing the scale of operations does not affect cost per unit
A. along the decreasing portion of the long-run average cost curve (LRAC)
B. along the increasing portion of the long-run average cost curve (LRAC)
C. exactly where LRAC reaches its minimum point
D. anywhere along the LRAC, as long as increasing the scale of operations does not affect cost per unit
Correct Answer: A
Economies of scale: as the firm expands its plant size, the cost per unit of output decreases.
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