Use the following to answer question:
-(Figure: Long-Run Average Cost)Use Figure: Long-Run Average Cost.This firm has _____ in the output region from B to C.
A)constant returns to scale
B)decreasing returns to scale
C)increasing returns to scale
D)falling marginal cost

Question

Use the following to answer question: 
-(Figure: Long-Run Average Cost)Use Figure: Long-Run Average Cost.This firm has _____ in the output region from B to C.
A)constant returns to scale 
B)decreasing returns to scale 
C)increasing returns to scale 
D)falling marginal cost

Quizplus · Accepted Answer

In the output region from B to C, the LRAC is increasing, indicating decreasing returns to scale. This means that as the firm increases its output in this range, the cost per unit of output increases.

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