For a typical firm, the portion of the AC curve that is downward-sloping is because production
A)exhibits decreasing returns to scale.
B)creates innovative technological progress.
C)economies of scale.
D)exhibits rising total product.

Question

Quizplus · Accepted Answer

The downward-sloping portion of the AC curve is due to economies of scale, which occur when a firm is able to produce goods at a lower cost per unit as it increases its level of production. This is typically due to the spreading of fixed costs (such as rent or equipment) over a larger number of units produced, as well as other cost savings that come with larger-scale production.

For a Typical Firm, the Portion of the AC Curve