What is the shape of the long-run average cost curve under conditions of economies of scale?
A)It is horizontal.
B)It initially falls and then rises.
C)It continuously rises.
D)It continuously falls.

Question

Quizplus · Accepted Answer

Economies of scale refer to the condition where, as the scale of production increases, the average cost of producing each unit decreases. This leads to a long-run average cost curve that continuously falls because larger production volumes spread the fixed costs over more units, reducing the cost per unit.

What Is the Shape of the Long-Run Average Cost Curve