Constant returns to scale exist when long-run average costs:
A) increase as output is increased.
B) decrease as output is increased.
C) remain constant as output is increased.
D) None of the statements is correct.

Question

Quizplus · Accepted Answer

Constant returns to scale occur when a proportional increase in inputs results in an equal proportional increase in output, which means that the long-run average costs remain constant as the output is increased.

Constant Returns to Scale Exist When Long-Run Average Costs