It is the result of ECONOMIES OF SCALE. Economies of scale refers to the proportionate saving in costs gained as a result of increased level of production. It normally occur as a result of the inverse relationship that exist between the quantity produced and the cost each unit produced; the higher the quantity produce, the lower the cost per unit. Thus, the long run average total cost decreases as the amount produce increases, this is shown by the downward sloping portion of a long run average total cost curve.
