In the long run,constant returns to scale necessarily occur when the firm increases its production and the firm's
A) total cost increases.
B) total cost does not change.
C) average total cost increases .
D) average total cost does not change.
E) production increases by more than does the firm's total cost.

Question

Quizplus · Accepted Answer

Constant returns to scale occur when the firm increases its production but the average total cost of production remains constant. This means that the firm is able to increase its output without any increase in per-unit costs. Therefore, option D is correct as the average total cost does not change.

In the Long Run,constant Returns to Scale Necessarily Occur When