Question

If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises. decreasing returns to scale consent returns to scale economies of scale increasing returns to scale

Answer 1

Answer: Decreasing returns to scale

Explanation: In simple words, decreasing returns to scale can be defined as the situation in which for every increase in 1 unit of output one has to invest more than 1 one unit of input.

In decreasing returns to scale the cost of production increases with level of production made.

Hence the right answer is option A.