Long-run average cost slopes downward over a range of output where a firm experiences decreasing returns to scale.

Name: Long-run average cost slopes downward over a range of output where a firm experiences decreasing returns to scale.
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Question

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Long-run average cost slopes downward over a range of output due to increasing returns to scale, not decreasing returns to scale. Decreasing returns to scale would lead to an increase in long-run average costs.

Long-Run Average Cost Slopes Downward Over a Range of Output