-Farmer Seth has a perfectly flat long-run average total cost curve over the range of output from 10,000 bushels of wheat to 100,000 bushels of wheat. Hence, over this range of output, Farmer Seth definitely experiences
A) constant marginal returns.
B) constant returns to scale.
C) constant economies of scale.
D) none of the above.

Question

-Farmer Seth has a perfectly flat long-run average total cost curve over the range of output from 10,000 bushels of wheat to 100,000 bushels of wheat. Hence, over this range of output, Farmer Seth definitely experiences
A) constant marginal returns. 
B) constant returns to scale. 
C) constant economies of scale. 
D) none of the above.

Quizplus · Accepted Answer

A perfectly flat long-run average total cost curve indicates that the cost per unit of output remains constant as output increases, which is characteristic of constant returns to scale.

-Farmer Seth Has a Perfectly Flat Long-Run Average Total Cost