When an increase in the firm's output reduces its long-run average total cost,it has _____ returns to scale.

A) increasing
B) decreasing
C) constant
D) variable

Returns to Scale

The change in output resulting from a proportionate increase in all inputs (factors of production), where increasing, constant, and decreasing returns to scale can occur.

Long-Run Average Total Cost

The average cost per unit of output in the long term when all inputs can be varied by the firm and economies of scale have been reached.

Output

The total amount of goods or services produced by a company, industry, or economy within a given period.