A firm with increasing 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

Increasing returns to scale imply that as a firm increases all inputs, output increases by a larger proportion, leading to decreasing long-run marginal costs because the firm becomes more efficient in production.

A Firm with Increasing Returns to Scale Would See