Mondo's Microbrewery Is Growing Rapidly

Multiple Choice

Mondo's Microbrewery is growing rapidly. As a result of achieving larger size, the firm realizes it needs to hire quite a few additional employees and upgrade its brewing and bottling equipment, which increases its average costs. The best explanation for these events is that Mondo's Microbrewery is experiencing ________ returns to scale.

A) increasing
B) constant
C) decreasing
D) first decreasing and then increasing