When the firm increases output and the costs rise disproportionately slower, then the long-run average cost curve is ________ and the firm is experiencing ________.
A) horizontal; constant returns to scale
B) downward sloping; constant returns to scale
C) upward sloping; diseconomies of scale
D) downward sloping; economies of scale

Question

Quizplus · Accepted Answer

When the firm increases output and the costs rise disproportionately slower, it experiences economies of scale, which is reflected by a downward sloping long-run average cost curve.

When the Firm Increases Output and the Costs Rise Disproportionately