A firm that has lower costs per unit as it increases production in the long run has:

A) increasing returns to scale.
B) decreasing returns to scale.
C) increasing opportunity costs.
D) scale reduction.

Increasing Returns to Scale

Occurs when an increase in all inputs by a certain percentage causes a more than proportional increase in output.

Decreasing Returns to Scale

Decreasing returns to scale occur when an increase in all inputs leads to a less than proportional increase in output, showing that the firm becomes less efficient as it scales up production.

Increasing Opportunity Costs

A situation where the cost of forgoing the next best alternative increases as more resources are devoted to an activity.