When the curve that envelops the series of possible short-run average total cost curves is horizontal, this means that there are:
A) economies of scale.
B) diseconomies of scale.
C) constant returns to scale.
D) diminishing returns.

Question

Quizplus · Accepted Answer

When the curve that envelops the series of possible short-run average total cost curves is horizontal, it indicates that there are constant returns to scale, meaning that as the scale of production increases, the average cost per unit remains constant. This is because the increase in production is offset by an equal increase in the inputs required, resulting in no significant change in the average cost per unit.

When the Curve That Envelops the Series of Possible Short-Run