For a firm,what does "constant returns to scale" refer to
A)Short-run average total cost changes at a constant rate as the quantity of output changes.
B)Short-run average total cost does not change as the quantity of output changes.
C)Long-run average total cost does not change as the quantity of output changes.
D)Long-run average total cost changes at a constant rate as the quantity of output changes.

Question

Quizplus · Accepted Answer

"Constant returns to scale" refers to the situation where the proportionate increase in input leads to a proportionate increase in output, resulting in no change in the long-run average total cost. Therefore, option C, which states that "Long-run average total cost does not change as the quantity of output changes" is the correct answer.

For a Firm,what Does "Constant Returns to Scale" Refer to