A firm with decreasing returns to scale would see:
A) decreasing long-run marginal costs.
B) increasing long-run marginal costs.
C) constant long-run marginal costs.
D) More information is necessary to determine the answer.

Question

Quizplus · Accepted Answer

A firm experiencing decreasing returns to scale will see increasing long-run marginal costs because as it scales up production, it becomes less efficient, causing the cost of producing each additional unit to increase.

A Firm with Decreasing Returns to Scale Would See