Question

As a firm expands it has to hire additional regional managers. This would likely lead to

a.) constant returns to scale

b.) diseconomies of scale

c.) economies of scale

Answer 1

IN simple words when any firm is operating and expands by adding more and more employees then it faces three types of economies of scale

1. By giving input if the company gets more than it will be economies of scale

2.when the input provided is equal to what the company get as output then called the constant return to scale

3.when the company gets less output as compared to given input then it will lead to diseconomies of scale

here in the given question as the firm is in expanding stage and hiring more workers which means the firm is at growth stage and getting more as a return from managers so it will be economies to scale

so option C