If your long-run costs exhibit increasing returns to scale,securing big orders leads you to
A)Increase average costs
B)Reduce average costs
C)Keep the average costs constant
D)None of the above

Question

​If your long-run costs exhibit increasing returns to scale,securing big orders leads you to
A)​Increase average costs
B)Reduce average costs
C)Keep the average costs constant
D)​None of the above

Quizplus · Accepted Answer

Increasing returns to scale means that as production increases, the cost per unit decreases. Therefore, securing big orders would lead to further cost reductions and reduction in average costs.

​If Your Long-Run Costs Exhibit Increasing Returns to Scale,securing Big

If Your Long-Run Costs Exhibit Increasing Returns to Scale,securing Big