Economies of scale occur when:
a. average fixed costs are falling.
b average fixed costs are constant.
c long-run average total costs rise as output increases.
d long-run average total costs fall as output increases.

d long-run average total costs fall as output increases.

Explanation:

Economies of scale are cost benefits enjoyed by companies when they increase production. Fixed costs are spread over the units produced. When there is a high level of production, the fixed costs are spread over a large number of goods, which reduces the cost element per unit.

Economies of scale also apply to variable costs. The expanded production increases efficiency in the production process. This reduces the average variable costs. Economies of scales can be both internal and external. When a company has economies of scale, its products tend to be more competitive in the market.

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