Assuming the Existence of Economies of Scale,if a Firm Finds

Multiple Choice

Assuming the existence of economies of scale,if a firm finds that it can reduce its unit cost by decreasing its scale of production,it means that

A) it has too much production capacity relative to its demand.
B) it should try to produce less.
C) the law of diminishing returns has not taken effect.
D) it has too much fixed overhead relative to its variable cost.