Constant returns to scale are illustrated by
A) a downward sloping long-run average cost curve.
B) a horizontal long-run average cost curve.
C) an upward sloping long-run average cost curve.
D) a long-run average cost curve that is shaped like an upside down U.

Question

Quizplus · Accepted Answer

Constant returns to scale occur when all inputs are increased proportionately and the firm's output also increases proportionately, resulting in no change in the long-run average cost per unit. This is represented by a horizontal long-run average cost curve.

Constant Returns to Scale Are Illustrated by