When a firm's long-run average cost curve is horizontal for a range of output, then that range of production displays
A)increasing returns to scale.
B)constant returns to scale.
C)decreasing returns to scale.
D)constant average fixed costs.

Question

Quizplus · Accepted Answer

A horizontal long-run average cost curve indicates constant returns to scale. This means that when all factors of production are increased by the same proportion, output increases by the same proportion, and the average cost per unit remains the same.

When a Firm's Long-Run Average Cost Curve Is Horizontal for a Range