If a higher level of production allows workers to specialize in particular tasks, a firm will likely exhibit ______________ and ________________ average total cost.

• A. Economies of Scale; Falling
• B. Economies of Scale; Rising
• C. Diseconomies of Scale; Falling
• D. Diseconomies of Scale; Rising

Answer: (A)

Verified step by step guidance

1. Understand the concept of Economies of Scale: This occurs when increasing production leads to a lower cost per unit due to factors like specialization, bulk buying, and more efficient use of resources.
2. Recognize that specialization allows workers to become more skilled at their tasks, increasing efficiency and productivity, which typically leads to lower costs.
3. Identify that when a firm experiences Economies of Scale, the average total cost of production decreases as the scale of production increases.
4. Consider the relationship between production scale and average total cost: If specialization leads to increased efficiency, the average total cost should fall.
5. Conclude that the correct answer is 'Economies of Scale; Falling' because specialization in tasks typically results in reduced average total costs as production scales up.