Long run average cost curves are downward sloping for increasing returns to scale production technologies.

Question

Quizplus · Accepted Answer

In the context of increasing returns to scale, long-run average cost curves slope downward because as production scales up, the average cost of producing each unit decreases. This is due to efficiencies gained from spreading fixed costs over a larger number of units and potentially benefiting from more efficient production techniques or volume discounts on inputs.

Long Run Average Cost Curves Are Downward Sloping for Increasing