CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

A firm exhibits economies of scale ______.

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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