If in some range of production, average cost is falling, the firm is experiencing
A)increasing returns to scale.
B)decreasing returns to scale.
C)constant returns to scale.
D)increasing costs per unit of output.

Question

Quizplus · Accepted Answer

When the average cost is falling in a range of production, it indicates that the firm is experiencing increasing returns to scale. This means that as the level of production increases, the firm is able to benefit from economies of scale, leading to lower average costs.

If in Some Range of Production, Average Cost Is Falling