A firm that is experiencing increasing returns to scale will

Question

Quizplus · Accepted Answer

Increasing returns to scale occur when the firm's output increases more than in proportion to the increase in all inputs. This means that as the firm increases its level of output, its unit costs will decrease, leading to higher profitability. Thus, the firm will want to increase the level of output in order to take advantage of these lower costs and increase profits even further.

A Firm That Is Experiencing Increasing Returns to Scale Will