If long run average costs are constant with respect to output,you have
A)Increasing returns to scale
B)Decreasing returns to scale
C)Constant returns to scale
D)None of the above

Question

​If long run average costs are constant with respect to output,you have
A)​Increasing returns to scale
B)Decreasing returns to scale
C)Constant returns to scale
D)​None of the above

Quizplus · Accepted Answer

If long run average costs are constant with respect to output, then it implies that a proportional increase in all inputs would lead to the same proportional increase in output, and hence, the cost per unit of output would remain the same. This is characteristic of constant returns to scale. Therefore, option C is the correct answer. Options A and B refer to increasing and decreasing returns to scale, respectively, where the long-run average costs vary with output. Option D is incorrect as it is a general statement and does not relate to the specific scenario described in the question.

​If Long Run Average Costs Are Constant with Respect to Output,you

If Long Run Average Costs Are Constant with Respect to Output,you