If a Firm Has a Long- Run Average Cost of $2

Multiple Choice

If a firm has a long- run average cost of $2 when it produces 4,000 units of an input and has a long- run average cost of $1 when it produces $10,000 units and the firm needs 10,000 units of the input, the firm_______ experience economies of scale, which makes the firm ________ likely to make the input rather than buy it.

A) does; less
B) does not; less
C) does; more
D) does not; more