Question

Which statements are true regarding economies of scale?

 

A. Economies of scale typically cause an industry to be perfectly competitive.

B. A firm that has economies of scale sees its average total costs decrease when production increases.

C. To maximize profits, a monopoly that occurs because of economies of scale should produce an output so that marginal revenue equals marginal costs.

D. When a firm has a natural monopoly, it has that type of monopoly because of economies of scale.