When a firm's average costs fall as output is increased,the firm is experiencing economies of scalE.

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When a firm's average costs decrease as the level of output increases, it is known as economies of scale. This means that the firm is able to operate more efficiently and increase its productivity while spreading its fixed costs over a larger volume of output. This results in a decrease in average costs per unit of output, leading to higher profits and a competitive advantage in the market.

When a Firm's Average Costs Fall as Output Is Increased,the