Asked by Jendayi Campbell on Jun 13, 2024
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If a firm builds a larger plant and increases output and if its long-run average total cost does not change,the firm has constant returns to scale.
Constant Returns To Scale
A condition where increasing all inputs by any proportion results in output increasing by that same proportion, indicating that size does not affect productivity.
Long-Run Average Total Cost
The cost per unit of output incurred when all factors of production are variable, and scale of production can be changed.
Output
The amount of products or services produced by a company, industry, or economic system.
- Appreciate the effects and implications of economies of scale, constant returns to scale, and diseconomies of scale.
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Learning Objectives
- Appreciate the effects and implications of economies of scale, constant returns to scale, and diseconomies of scale.
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