Which of the following cost curves demonstrate increasing returns to scale?
A) returns to scale have nothing to do with the shape of the long- run average cost curve
B) a horizontal long- run average cost curve
C) a downward- sloping long- run average cost curve
D) an upward- sloping long- run average cost curve
E) a vertical long- run average cost curve

Question

Quizplus · Accepted Answer

A downward-sloping long-run average cost curve indicates increasing returns to scale, as the firm experiences lower average costs as it increases production.

Which of the Following Cost Curves Demonstrate Increasing Returns to Scale