Which of the following is consistent with increasing returns to scale?
A)An upward sloping marginal cost curve
B)A downward sloping marginal cost curve
C)An upward sloping long-run average cost curve
D)A downward sloping long-run average cost curve

Question

Quizplus · Accepted Answer

Increasing returns to scale occur when a firm's output increases more than proportionately to its inputs. This leads to economies of scale and a reduction in long-run average costs. Therefore, a downward slope in the long-run average cost curve is consistent with increasing returns to scale.

Which of the Following Is Consistent with Increasing Returns to Scale