If a firm experiences constant returns to scale at all output levels,then its long-run average total cost curve would
A)slope downward
B)be horizontal
C)slope upward
D)slope downward for low output levels and upward for high output levels
E)slope upward for low output levels and downward for high output levels

Question

Quizplus · Accepted Answer

Constant returns to scale means that when all inputs are increased by the same proportion, output also increases by the same proportion. This implies that the firm's long-run average total cost (LRATC) curve will be a horizontal line, indicating that as the firm increases its output, the average cost per unit remains constant.

If a Firm Experiences Constant Returns to Scale at All