The decreasing portion of a firm's long run average cost curve is attributable to:
A) diminishing returns to scale.
B) increasing marginal cost.
C) economies of scale.
D) diseconomies of scale.

Question

Quizplus · Accepted Answer

The decreasing portion of a firm's long run average cost curve is attributable to economies of scale. This means that as the firm increases its production levels, it is able to take advantage of lower costs of production due to efficiency gains, such as spreading fixed costs over a larger quantity of output or utilizing specialized machinery.

The Decreasing Portion of a Firm's Long Run Average Cost