If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would
A)slope downward.
B)be horizontal.
C)slope upward.
D)slope downward for low output levels and upward for high output levels.

Question

Quizplus · Accepted Answer

Constant returns to scale imply that increasing all inputs by a certain percentage leads to an increase in output by the same percentage, resulting in constant long-run average total costs at all output levels. This is represented by a horizontal long-run average total cost curve.

If a Firm Experiences Constant Returns to Scale at All