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    Can someone please help me with this question for economics? I have tried to look up the mark scheme but cannot find it.

    A firm which prints greeting cards records its short run costs. It observes that the average cost per card decreases as more are produced, although the marginal cost is rising. It follows that

    a - there are economies of scale
    b - the law of diminishing returns has not yet set in
    c - the fixed costs are zero
    d - marginal costs rise whenever average costs fall
    e - marginal costs are below average costs

    thanks for the help!
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    help pls
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    The answer is E. You need to draw a short run AC and MC and pick an area where AC falls and MC is rising.
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    (Original post by keynes24)
    The answer is E. You need to draw a short run AC and MC and pick an area where AC falls and MC is rising.
    I agree E is correct, but couldn't A also be? It is still at the point where AC is falling, so there are still economies of scale to exploit.
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    (Original post by Speckle)
    I agree E is correct, but couldn't A also be? It is still at the point where AC is falling, so there are still economies of scale to exploit.
    Economies of scale takes place only in the long run, it cannot be A.
 
 
 
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