Question

Constant returns to scale occur when the firm’s long-run

a. total costs are constant as output increases.
b. average total costs are constant as output increases.
c. average cost curve is falling as output increases.
d. average cost curve is rising as output increases.

Answer 1

Answer: average total costs are constant as output increases(B)

Step-by-step explanation:

Constant returns to scale is a situation that occurs when the average cost does not change when there is an increase in output.

The long-run average total cost remains the same as there is a change in the quantity of

output. Constant returns to scale occur when an increase in the number of inputs will lead to an equivalent rise in the output.