When an increase in the firm's output reduces its long-run average total cost, it achieves:

Question

Quizplus · Accepted Answer

When an increase in the firm's output reduces its long-run average total cost, it achieves economies of scale. This means that the firm is benefiting from the advantages of producing on a larger scale, such as lower costs for inputs, better utilization of resources, and greater specialization. Thus, the firm can produce more efficiently and with lower per-unit costs, resulting in an increase in profits or a reduction in prices for consumers.

When an Increase in the Firm's Output Reduces Its Long-Run