Increasing returns to scale are indicated by:
A)the rising segment of the average variable cost curve
B)the declining segment of the long-run average cost curve
C)the difference between total revenue and total cost
D)a rising marginal cost curve
E)the falling segment of the average fixed cost curve

Question

Quizplus · Accepted Answer

Increasing returns to scale refer to a situation where a firm's output increases proportionally more than the increase in its inputs. This results in declining long-run average cost, indicated by the falling segment of the long-run average cost curve. Therefore, option B is the correct choice. The other options are not related to increasing returns to scale.

Increasing Returns to Scale Are Indicated By