Asked by Shehla Qureshi on May 10, 2024
Verified
If your firm is operating in the negatively sloped portion of a long-run average total cost curve,then your production exhibits:
A) higher wages.
B) increasing returns to scale.
C) decreasing returns to scale.
D) increased input prices.
Returns to Scale
The rate at which output increases as inputs are increased proportionally.
Long-Run Average Total Cost
The average cost per unit of output when all input factors are variable, and economies of scale are fully exploited.
Production
The process of creating goods and services from various inputs like labor, knowledge, and raw materials.
- Gain an understanding of the notions concerning economies of scale, constant returns to scale, and diseconomies of scale.
Verified Answer
IS
Israa SalemMay 16, 2024
Final Answer :
B
Explanation :
Operating in the negatively sloped portion of a long-run average total cost curve indicates increasing returns to scale, meaning output increases by a larger proportion than the increase in inputs.
Learning Objectives
- Gain an understanding of the notions concerning economies of scale, constant returns to scale, and diseconomies of scale.
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