Constant returns to scale occur when a firm's
A)marginal costs are constant as output increases.
B)long-run average total costs are decreasing as output increases.
C)long-run average total costs are increasing as output increases.
D)long-run average total costs do not vary as output increases.

Question

Quizplus · Accepted Answer

Constant returns to scale means that as a firm increases its inputs, it will also increase its output at the same rate, without causing any change in the long-run average total costs. Therefore, the correct choice is D, because long-run average total costs remain constant with changes in output.

Constant Returns to Scale Occur When a Firm's