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    Economies of Scale or not?

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    A security system companyâ??s total production costs depend on the number of systems produced according to the following equation: Total Costs = $10,000,000 + $2000*quantity produced. Given these data, which of the following is a false statement?
    a. There are economies of scale.
    b. There are fixed costs associated with this business.
    c. There are diseconomies of scale.
    d. A firm that produces a larger output has a cost advantage over a smaller firm.

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    Solution Preview

    b. is obviously correct.

    a. and d. essentially say the same thing, economies of scale means that producing larger outputs ...

    Solution Summary

    The expert examines if economies of scales or not.