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Under which of the following situations, economies of scale exists to the potential and persists?

Economies of scale exist and persist when a firm's Long-Run Average Cost (long-run cost of producing a unit of output) declines as the scale of output increases. This…

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Under which of the following situations, economies of scale exists to the potential and persists?

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Correct answer D

Economies of scale exist and persist when a firm's Long-Run Average Cost (long-run cost of producing a unit of output) declines as the scale of output increases. This downward slope of the LRAC curve results from technical, managerial, financial, and marketing efficiencies achieved at larger production volumes.

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