Asked by Jacqueline Segura on Jun 18, 2024
Verified
If there are increasing returns to scale, then average costs are a decreasing function of output.
Increasing Returns to Scale
A situation in which output increases by a greater proportion than the increase in inputs used.
Average Costs
The total cost of production divided by the total quantity produced, reflecting the cost per unit of output.
- Understand the concept of returns to scale and its impact on production and cost.
Verified Answer
TN
Tabitha NguyenJun 23, 2024
Final Answer :
True
Explanation :
When there are increasing returns to scale, as output increases, the cost per unit of output decreases, leading to a decrease in average costs.
Learning Objectives
- Understand the concept of returns to scale and its impact on production and cost.