Question

When the firm increases output and the costs rise disproportionately​ slower, then the longminusrun average cost curve is​ ________ and the firm is experiencing​ ________.

A. downward​ sloping; economies of scale
B. upward​ sloping; diseconomies of scale
C. downward​ sloping; constant returns to scale
D. ​horizontal; constant returns to scale

Answer 1

A. Downward sloping; economies of scale

Step-by-step explanation:

As the costs rise slower than quantity produced, the cost for each additional unit produced (marginal cost) is decreasing. That is when the Average Cost curve is downward sloping.

At that point the more products are made (scales of production) the lower unit cost becomes (more economic), which means economies of scale.