When there are economies of scale in the production of a product, the long-run average total cost curve
A)increases as output increases.
B)sometimes increases and sometimes decreases as output increases.
C)does not change as output increases.
D)declines as output increases.
E)is horizontal.

Question

Quizplus · Accepted Answer

When there are economies of scale, the long-run average total cost curve declines as output increases. This means that as the scale of production increases, the per-unit cost of production decreases, leading to lower average total costs.

When There Are Economies of Scale in the Production of a Product