When a firm experiences declining long-run average total costs as it produces more output, there are
A) increasing marginal returns to variable inputs.
B) economies of scale.
C) diseconomies of scale.
D) constant returns to scale.

Question

Quizplus · Accepted Answer

Economies of scale occur when a firm experiences declining long-run average total costs as it produces more output. This is typically due to factors such as specialization and increased bargaining power with suppliers. As a result, the firm can produce the same amount of output with fewer resources, leading to cost savings and greater efficiency.

When a Firm Experiences Declining Long-Run Average Total Costs as It