Use the following to answer questions below:

-Refer to the long-run average cost (LAC) curve graph. At which level of output is the firm experiencing increasing returns to scale?
A) Output level A
B) Output level B
C) Output level C
D) None of the above is correct.

Question

Use the following to answer questions below:
 
-Refer to the long-run average cost (LAC) curve graph. At which level of output is the firm experiencing increasing returns to scale?
A) Output level A 
B) Output level B 
C) Output level C 
D) None of the above is correct.

Quizplus · Accepted Answer

At Output level A, the firm is experiencing increasing returns to scale because this is the portion of the LAC curve where costs are decreasing as output increases.

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