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The six-tenths rule reflects an economy of scale because cost rises

  • A.independently of capacity
  • B.more slowly than capacity
  • C.faster than capacity
  • D.in exact proportion to capacity

Answer: B

An exponent below one means the cost per unit of capacity falls as the plant gets bigger, which is why process industries build large. The exponent is not universal and must be taken from data for the particular kind of equipment.

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