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 0 to A.
A)decreasing returns to scale
B)constant returns to scale
C)increasing returns to scale
D)negative costs of production

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 0 to A.
A)decreasing returns to scale 
B)constant returns to scale 
C)increasing returns to scale 
D)negative costs of production

Quizplus · Accepted Answer

In the output region from 0 to A, the long-run average cost is decreasing, which indicates increasing returns to scale. This means as the firm increases its output, the cost per unit decreases, suggesting it is becoming more efficient in production.

Use the Following to Answer Question