What are the sources of increasing returns and economies of scale of the recent increase in trend rate productivity experienced in the U.S.?

Please provide the best answer for the statement.

There are several sources of increasing returns and economies of scale. First, firms are able to use more specialized, and thus more productive, capital and labor to expand operations. Second, firms are able to spread the high development costs over their larger output. Third, many of the products these firms produce can satisfy a large number of customers at the same time. Software, for example, has a one-time production cost and can be sold at a relatively low cost to a large number of customers. Fourth, there are network effects from a larger portion of people using a product, thereby increasing the effectiveness of the product. This includes cell phones, the internet, and software packages. Fifth, firms gain from learning by doing and once they master a process, they benefit by being able to recreate it at a very low cost.

Economics

You might also like to view...

Use the above figure. Assuming that policy actions are unanticipated, if the economy is at point A and the policy makers want to get to point B, they could

A) decrease taxation. B) increase the money supply. C) increase government spending. D) decrease the money supply.

Economics

Which of the following is NOT one of the reasons for declining union membership in the United States?

A) The economy has shifted away from manufacturing. B) The AFL-CIO merger and creation of the Change to Win Federation reduced competition among unions. C) Some industries have been deregulated. D) Labor force participation by women has increased.

Economics