If a firm has lower costs per unit as it increases production in the long run, this is an example of:
A)increasing returns to scale.
B)decreasing returns to scale.
C)increasing opportunity costs.
D)scale reduction.

Question

Quizplus · Accepted Answer

Increasing returns to scale occur when a firm's output increases at a greater rate than its inputs, resulting in lower costs per unit as production increases. This is also known as economies of scale.

If a Firm Has Lower Costs Per Unit as It