When do constant returns to scale occur
A)when long-run total costs are constant as output increases
B)when long-run average total costs are constant as output increases
C)when the firm's long-run average-cost curve is falling as output increases
D)when the firm's long-run average-cost curve is rising as output increases

Question

Quizplus · Accepted Answer

Constant returns to scale occur when long-run average total costs are constant as output increases. This means that increasing production does not increase average costs per unit, indicating that the firm is able to take advantage of economies of scale without facing diseconomies of scale.

When Do Constant Returns to Scale Occur