Question

If a technology displays increasing returns to scale, then: a. The TC curve is increasing at a decreasing rate. b. The ATC curve is increasing at a decreasing rate. c. The TC curve is increasing at an increasing rate. d. The ATC curve is increasing at an increasing rate.

Answer 1

The ATC curve is increasing at a decreasing rate.

Step-by-step explanation:

Increasing returns to scale is when input used in production process in increased and output increases more than the proportion of the input used.

for example, if technology is increased by 20% and output increases by 50%.

When an input displays increasing returns to scale, the average total cost increases at a decreasing rate. this is because less input is used to produce more output