External economies of scale exist when an industry's outputs increase and
A) a firm's long run average cost curve shifts downward.
B) a firm's long run average cost curve shifts upward.
C) a firm's long run average cost curve stays the same.
D) a firm's long run average cost curve hits zero.

Question

Quizplus · Accepted Answer

External economies of scale occur when the growth of an industry benefits all firms in the industry, resulting in an overall reduction in long run average costs. This is reflected by a downward shift in the industry's long run average cost curve.

External Economies of Scale Exist When an Industry's Outputs Increase