When a firm's long-run average total cost falls as its output increases, the firm is experiencing
A) constant returns to scale.
B) decreasing marginal returns.
C) economies of scale.
D) decreasing cost of marginal returns.
E) diseconomies of scale.

Question

Quizplus · Accepted Answer

The firm is experiencing economies of scale, which means that as it produces more output, its cost per unit decreases. This is usually due to factors such as specialization, increased efficiency, and better use of resources.

When a Firm's Long-Run Average Total Cost Falls as Its