If a firm has increasing returns, what can be expected if sales and customers increase?
A) costs increase, prices remain constant, marginal returns decreases
B) cost increase, prices increase, marginal returns remain the same
C) costs decrease, prices decrease, marginal returns remain the same
D) costs decrease, prices remain constant, marginal returns increase

Question

Quizplus · Accepted Answer

In a situation of increasing returns, as sales and customers increase, the firm benefits from economies of scale, leading to decreased costs and increased marginal returns while prices remain constant.

If a Firm Has Increasing Returns, What Can Be Expected