If a firm increases its output level by 50 percent and,as a result,long-run total cost rises by 40 percent,the firm is experiencing
A)diseconomies of scale
B)constant returns to scale
C)economies of scale
D)increasing marginal returns
E)diminishing marginal returns

Question

Quizplus · Accepted Answer

The firm is experiencing economies of scale because the percentage increase in output (50%) is greater than the percentage increase in long-run total cost (40%), indicating that the firm is becoming more efficient as it increases production.

If a Firm Increases Its Output Level by 50 Percent