At the current level of output, long-run marginal cost is $50 and long-run average cost is $75. This implies that:
A) there are neither economies nor diseconomies of scale.
B) there are economies of scale.
C) there are diseconomies of scale.
D) the cost-output elasticity is greater than one.

Question

Quizplus · Accepted Answer

When long-run marginal cost (LRMC) is less than long-run average cost (LRAC), it implies that increasing production will decrease the average cost, indicating the presence of economies of scale.

At the Current Level of Output, Long-Run Marginal Cost Is