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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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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