When a decrease of a firm's scale of production leads to lower average costs per unit produced, there is an increasing return to scale.

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Quizplus · Accepted Answer

When a decrease in a firm's scale of production leads to lower average costs per unit produced, it indicates decreasing returns to scale, not increasing. Increasing returns to scale occur when an increase in production leads to lower average costs per unit.

When a Decrease of a Firm's Scale of Production Leads