If your plant is operating in the negatively sloped portion of a long-run average cost curve, production exhibits:
A) higher wages.
B) economies of scale.
C) diseconomies of scale.
D) increased input prices.

Question

Quizplus · Accepted Answer

When a plant is operating in the negatively sloped portion of a long-run average cost curve, it means that as production increases, the firm experiences economies of scale. This is because as the level of output increases, the cost of producing each unit decreases due to the spreading of fixed costs over a larger number of units. Therefore, choice B, economies of scale, is the correct answer.

If Your Plant Is Operating in the Negatively Sloped Portion