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 experiencing coordination problems.

Question

Quizplus · Accepted Answer

Constant returns to scale imply that increasing all inputs by a certain percentage results in an increase in output by the same percentage, leading to unchanged long-run average total costs as output increases.

When a Firm Experiences Constant Returns to Scale