Question

A firm experiences constant returns to scale when ​ _______. A. the LRAC curve is upward sloping B. average total cost does not change when output changes C. the plant the firm uses and the quantity of labor the firm hires remain constant D. the LRAC curve is downward sloping

Answer 1

Answer:

B. average total cost does not change when output changes

Explanation:

A firm can experience increasing or decreasing return to scale and constant return to scale, it depends on various factors from the average total cost to output changes. If a firm experiences constant return to scale it means that the average total cost does not change when output changes. If the average total cost increases that mean increasing return to scale and if it decreases than decreasing return to scale