If a product exhibits increasing returns to scale, then the average cost of making the product will ______ as a company produces more of it?

Question

Quizplus · Accepted Answer

When a product exhibits increasing returns to scale, it means that as the quantity of production increases, the proportionate increase in inputs leads to a larger proportionate increase in outputs. This results in a decrease in the average cost of making the product because the cost of inputs per unit of output decreases as production scales up.

If a Product Exhibits Increasing Returns to Scale, Then the Average