The claims processing office of an insurance company is planning to double the square footage of its office space gradually over the next five years. Its cost accountants are forecasting that by doing so the average total cost per claim processed will decline from $50 per claim today to $35 per claim five years hence. Can we say that this insurance company’s claims office has economies of scale, diseconomies of scale or neither in “producing” processed claims and why is this the case?

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In my opinion this insurance companys claims office has di... View the full answer