If an increase in production lowers your firm's short- run average total cost, your firm is likely experiencing ________and should consider ________ output levels.

Question

Quizplus · Accepted Answer

If an increase in production leads to a decrease in average total cost, it implies that the firm is experiencing economies of scale. This means that the cost per unit of production is decreasing as the scale of production is increased. As a result, it is advisable for the firm to expand its output levels to further benefit from lower costs.

If an Increase in Production Lowers Your Firm's Short- Run