Generally speaking, if a firm faces decreasing average total costs of production throughout its entire range of output, then
A)more firms will enter the market.
B)it will be unable to remain in business.
C)the firm is a natural monopoly.
D)the firm is able to earn only a normal profit.

Question

Quizplus · Accepted Answer

A firm facing decreasing average total costs of production throughout its entire range of output is experiencing economies of scale. This condition is characteristic of a natural monopoly, where a single firm can produce the entire market output at a lower cost than could multiple firms.

Generally Speaking, If a Firm Faces Decreasing Average Total Costs