If a long run average cost curve is falling form left to right this is an example of ?
Correct answer: A. increasing returns to scale
- A. increasing returns to scale
- B. decreasing returns to scale
- C. constant returns to scale
- D. the minimum efficient scale
Explanation
A falling long-run average cost curve means that increasing the scale of production reduces average cost. This is increasing returns to scale, whereas constant returns would leave average cost unchanged.
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