Economies of 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)marginal costs are equal to average total costs for all levels of output.

Question

Quizplus · Accepted Answer

Economies of scale occur when a firm can produce goods at a lower cost per unit as output increases. This is reflected in decreasing long-run average total costs. Therefore, choice B is the correct answer.

Economies of Scale Occur When a Firm's