Asked by Lydia Silva on May 11, 2024
Verified
When long-run average total cost is constant as output increases,the firm has constant returns to scale.
Constant Returns To Scale
Long-run average total cost is constant as output increases.
Long-Run Average Total Cost
The average cost per unit of output when all inputs, including those typically fixed, are variable and optimized.
- Recognize the effects of economies of scale, constant returns to scale, and diseconomies of scale.
Verified Answer
LP
Leticia PerezMay 15, 2024
Final Answer :
True
Explanation :
When long-run average total cost is constant, it means that the cost per unit of output remains the same as output increases. This indicates that the firm is able to increase its production proportionately without any change in efficiency, resulting in constant returns to scale.
Learning Objectives
- Recognize the effects of economies of scale, constant returns to scale, and diseconomies of scale.
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