Question 8 1 point In the long run an accounting firm can pr

Question 8 (1 point) In the long run, an accounting firm can prepare 2.000 tax returns per month at a total cost of $500,000 or 3,000 tax returns at a total cost of $600,000 For long-run output between 2,000 and 3,000 returns per month, the accounting firm experiences: Economies of Scale Diseconomies of Scale Constant returns to scale

Solution

Answer 1:- The correct answer:- Economies of scale

Reason:- at 2000 out put the per unit cost was 500000 / 2000 = 250
at 3000 out put the per unit cost was 600000 / 3000 = 200
ie the average cost is declining hence it is economies of scale

Answer:- This firm is experiencing diminishing return

Correct Answer:- True

Reason:- From output level 2 to 3, MC curve start increasing reflecting the set in of diminishing return.