# Chloe's Cafe sells gourmet cinnamon rolls. In the long run, the cafe incurs a total cost of $500...

## Question:

Chloe's Cafe sells gourmet cinnamon rolls. In the long run, the cafe incurs a total cost of $500 to produce 1,000 cinnamon rolls. If Chloe's Cafe exhibits economies of scale between 1,000 and 2,000 cinnamon rolls, the long-run average total cost for 1,500 cinnamon rolls is:

a. equal to $0.50.

b. lower than $0.50.

c. higher than $0.50.

d. higher than $500.

## Economies of Scale

In economics, the economies of scale is defined as a reduction of the total costs due to increase in production as the company ramp up its capacity to produce goods to meet customer demands.

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Chapter 3 / Lesson 41Explore the principle of economies of scale and delve into several real-world examples. Learn the formula for determining economies of scale as well as their types, benefits, inputs and the factors that influence them. Discern the limits of economies of scale and find out the difference between economies of scale and diseconomies of scale.

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