Constant returns to scale exist when long-run average costs:
A) increase as output is increased.
B) decrease as output is increased.
C) remain constant as output is increased.
D) None of the preceding statements is correct.

Question

Quizplus · Accepted Answer

Constant returns to scale means that the percentage increase in output is equal to the percentage increase in all inputs, resulting in constant long-run average costs as output is increased. Therefore, the answer is option C.

Constant Returns to Scale Exist When Long-Run Average Costs