When a firm experiences constant returns to scale,
A)long-run average total cost is unchanged, even when output increases.
B)long-run marginal cost is greater than long-run average total cost.
C)long-run marginal cost is less than long-run average total cost.
D)the firm is likely to experience coordination problems.

Question

Quizplus · Accepted Answer

Constant returns to scale means that when all inputs are increased by the same proportion, output increases by the same proportion, resulting in unchanged long-run average total cost.

When a Firm Experiences Constant Returns to Scale