If a firm experiences economies of scale over the entire range of output, the long-run average cost curve will be aU-shaped bupward sloping cdownward sloping dhorizontal
Question
If a firm experiences economies of scale over the entire range of output, the long-run average cost curve will be aU-shaped bupward sloping cdownward sloping dhorizontal
Solution
The answer is c) downward sloping.
Economies of scale refer to the cost advantage that a business obtains due to expansion. It's the factor that causes the average cost of producing a product to fall, as output of the product rises.
If a firm experiences economies of scale over the entire range of output, it means that as they produce more, their average cost per unit continues to decrease. This is represented by a downward sloping curve on a graph where the y-axis represents cost and the x-axis represents quantity.
So, in the long run, if a firm continues to experience economies of scale, their average cost curve will continue to slope downward.
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