If long-run average total cost decreases as output increases, the firm is experiencing economies of scale.
In summary, economies of scale refer to situations in which the long-run average cost decreases as a firm's production increases. A striking example of economies of scale can be found in the chemical industry.
Economies of scale refer to the phenomenon in which the average cost per unit of production decreases as the size or scale of the product produced by a firm increases.
This is an example of a natural monopoly. The most efficient number of companies is one. Further economies of scale arise when manufacturing complex products such as automobiles. The manufacturing process involves various complex steps.
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