A Firm Currently Employs Five Units of Capital

Essay

A firm currently employs five units of capital.When the firm adds a sixth unit of capital,it is able to reach a lower average cost for a greater quantity of output.What does this tell you about the shape of the long-run average cost curve and are economies of scale occurring? Explain briefly.Does this necessarily imply increasing or decreasing returns to scale in production or is it ambiguous? Explain briefly.