Increasing returns to scale occur when a firm's:
A) average costs of production increase as its output increases.
B) average costs of production decrease as its output increases.
C) average fixed costs increase as its output increases.
D) marginal costs increase as its output increases.

Question

Quizplus · Accepted Answer

Increasing returns to scale occur when a firm's output increases more than its input factors. This leads to a decrease in average costs of production as fixed costs are spread over a larger output.

Increasing Returns to Scale Occur When a Firm's