When a firm experiences economies of scale,
A)short-run average total cost is maximized.
B)long-run average total cost is maximized.
C)long-run average total cost decreases as output increases.
D)long-run average total cost increases as output increases.

Question

Quizplus · Accepted Answer

Economies of scale occur when long-run average total cost decreases as output increases, indicating that the firm becomes more efficient in production as it scales up.

When a Firm Experiences Economies of Scale