Suppose that, as a firm's total production (or output) increases, the firm's manager correctly observes that an economy of scale is occurring. The manager must have noticed that:
a. ?per-unit costs increase as output increases
b. ?per-unit costs decrease as output increases
c. ?per-unit costs remain constant as output increases
d. ?output does not affect per-unit costs
Answer: per-unit costs decrease as output increases
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What will be an ideal response?
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