If the output elasticity of total cost is less than one, then the long-run average cost curve experiences:
A)economies of scale.
B)diseconomies of scale.
C)decreasing returns to scale.
D)the minimum efficient scale.

Question

Quizplus · Accepted Answer

Output elasticity of total cost less than one indicates that as output increases, total cost increases at a slower rate, which is characteristic of economies of scale. This means the firm is becoming more efficient as it produces more, leading to a decrease in the average cost per unit.

If the Output Elasticity of Total Cost Is Less Than