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    Question

    In which of the following case , the production cost

    curves shifts downward?
    A Increase in labor productivity Correct Answer Incorrect Answer
    B Increasing returns to scale Correct Answer Incorrect Answer
    C Internal economies Correct Answer Incorrect Answer
    D External diseconomies Correct Answer Incorrect Answer

    Solution

    An economy of scale is a microeconomic term that refers to factors driving production costs down while increasing the volume of output. There are two types of economies of scale: internal and external economies of scale. Internal economies of scale are firm-specific—or caused internally—while external economies of scale occur based on larger changes outside the firm. Both result in declining marginal costs of production, yet the net effect is the same

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