When a firm's long-run average total costs do not vary as output increases, the firm exhibits
A)economies of scale.
B)constant returns to scale.
C)diseconomies of scale.
D)an efficient use of resources.

Question

Quizplus · Accepted Answer

When a firm's long-run average total costs do not vary as output increases, it means that the firm is experiencing constant returns to scale. This suggests that the firm's production technology is such that increasing the scale of production does not lead to any significant increase or decrease in the firm's average cost per unit of output.

When a Firm's Long-Run Average Total Costs Do Not Vary