The long-run average cost curve slopes downward if there are:
A) some factors without diminishing marginal returns.
B) economies of scope in the management of multiplant operations.
C) economies of scale.
D) diseconomies of scope in the management of multiplant operations.
E) no factors without diminishing marginal returns.

Question

Quizplus · Accepted Answer

The long-run average cost curve slopes downward when there are economies of scale, which refer to the cost advantages that arise when a firm's scale of production increases. This means that as a company produces more, the cost of producing each unit decreases, leading to a downward-sloping long-run average cost curve. Thus, economies of scale are the only factor that leads to a downward-sloping long-run average cost curve, making choice C the correct answer.

The Long-Run Average Cost Curve Slopes Downward If There Are