A feature of imperfect competition is _________, which means that as the firm expands its production, average costs of production fall. Therefore, the firm can _______ its costs of production by selling internationally.
A) increasing returns to scale; decrease
B) increasing returns to scale; increase
C) decreasing returns to scale; decrease
D) decreasing returns to scale; increase

Question

Quizplus · Accepted Answer

The feature of imperfect competition described in the question is increasing returns to scale. As the firm expands its production, average costs of production fall, meaning that the firm can produce more output at a lower cost per unit. This allows the firm to decrease its costs of production, making it more competitive in international markets.

A Feature of Imperfect Competition Is _________, Which Means That