If it is possible to spread total fixed cost efficiently over a larger and larger quantity of output,then a firm will not experience
A) an elastic demand curve.
B) economies of scale.
C) increasing returns to scale.
D) decreasing returns to scale.
E) the law of demand.

Question

Quizplus · Accepted Answer

If a firm can spread its fixed costs over a larger output, it experiences economies of scale, leading to decreasing average costs, not decreasing returns to scale.

If It Is Possible to Spread Total Fixed Cost Efficiently