When returns to scale are increasing, long run marginal cost is:
A)equal to long run average cost.
B)greater than long run average cost.
C)at its minimum.
D)less than long run average cost.

Question

Quizplus · Accepted Answer

When returns to scale are increasing, long run marginal cost is less than long run average cost. This means that as production increases, the cost per unit decreases, demonstrating economies of scale.

When Returns to Scale Are Increasing, Long Run Marginal Cost