In the long run Firm A incurs total costs of $900 when output is 30 units and $1,200 when output is 40 units. Firm A exhibits:
a. diseconomies of scale because total cost is rising as output rises.
b. constant returns to scale because average total cost is constant as output rises.
c. diseconomies of scale because average total cost is rising as output rises.
d. economies of scale because average total cost is falling as output rises.
1 Answer
? Favorite Answer
B is correct, the average total cost is constant at $30.