When ________ scale of production leads to ________ average costs, an industry exhibits decreasing returns to scale.
A) decreased; higher
B) increased; unchanging
C) increased; higher
D) increased; lower

Question

Quizplus · Accepted Answer

When production is scaled up and it results in higher average costs, it indicates that the industry is experiencing decreasing returns to scale. This means that as more inputs are used, the output increases at a decreasing rate, leading to higher costs per unit of output.

When ________ Scale of Production Leads to ________ Average Costs

When Scale of Production Leads to Average Costs