On the downward sloping portion of a firm's long-run average cost curve, it is experiencing
A) economies of scale.
B) constant returns to scale.
C) diseconomies of scale.
D) diminishing marginal returns.

Question

Quizplus · Accepted Answer

On the downward sloping portion of a firm's long-run average cost curve, the firm is experiencing economies of scale. This means that as the firm increases its output, its long-run average costs decrease, indicating that it is becoming more efficient in production as it grows.

On the Downward Sloping Portion of a Firm's Long-Run Average