Multiple Choice
Which of the following statements is correct if a firm's capacity output increases from 300 to 600 and its total costs rise from $40,000 to $78,000?
A) The firm is experiencing constant returns to scale.
B) The firm is experiencing decreasing returns to scale.
C) The firm is experiencing increasing returns to scale.
D) The firm's long-run average cost must have decreased but its short-run average cost could have either decreased or increased.
Correct Answer:
Verified
Correct Answer:
Verified
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