Increasing marginal returns means that as the firm expands its output, its
A) long-run average total cost increases.
B) long-run average total cost decreases.
C) short-run average total cost increases.
D) short-run average total cost decreases.

Question

Quizplus · Accepted Answer

Increasing marginal returns imply that each additional unit of input contributes more to output than the previous unit, leading to a decrease in short-run average total cost as output expands.

Increasing Marginal Returns Means That as the Firm Expands Its