When an increase in the firm's output reduces its long-run average total cost,it has _____ returns to scale.
A)increasing
B)decreasing
C)constant
D)variable

Question

Quizplus · Accepted Answer

When an increase in a firm's output reduces its long-run average total cost, it is experiencing increasing returns to scale. This means that as the firm expands its production, it becomes more efficient, leading to lower average costs per unit produced.

When an Increase in the Firm's Output Reduces Its Long-Run