Internal economies of scale are expected to bring about?
- an increase in short-run average cost
- an increase in long-run average cost
-
a decrease in long-run average cost
- a decrease in short-run average cost
The correct answer is: C
Explanation
Internal economies of scale refer to the reduction in long-run average costs that a company experiences as it increases its production levels. This decrease in costs can arise from various factors, such as enhanced efficiency, bulk purchasing of inputs, or improved resource utilization. As a company produces more, the average cost per unit tends to decline, resulting in more cost-effective operations over time.