The term "constant returns to scale" describes a situation where
A) expanding all inputs does not change the average cost of production.
B) a larger-scale firm can produce at a lower cost than a smaller-scale firm.
C) expanding all inputs changes the average cost of production.
D) the quantity of output rises and the average cost of production falls.

Question

Quizplus · Accepted Answer

Constant returns to scale occur when increasing all inputs by the same proportion results in an increase in output by that same proportion, leaving the average cost of production unchanged.

The Term "Constant Returns to Scale" Describes a Situation Where