The portion of the long-run average cost curve in which economies of scale are experienced shows that, as output increases, the
A) average total cost decreases.
B) average variable cost is constant and the average fixed cost decreases.
C) average total cost increases.
D) marginal cost decreases.
E) marginal cost increases.

Question

Quizplus · Accepted Answer

The portion of the long-run average cost curve where economies of scale are experienced shows that as output increases, the average total cost decreases. This is due to the spreading of fixed costs over a larger production volume and the efficiencies gained through specialization and division of labor. Therefore, choice A is the best answer.

The Portion of the Long-Run Average Cost Curve in Which