Question

g A firm encountering economies of scale over some range of output will have a Multiple Choice rising long-run average cost curve. rising, then falling, then rising long-run average cost curve. falling long-run average cost curve. flat long-run average cost curve.

Answer 1

Answer:

Falling long-run average cost curve.

Explanation:

A firm encountering economies of scale over some range of output will have a falling long-run average cost curve because the firm uses the lowest or most efficient cost per unit at each level of production. Economies of scale in business management refers to the process when there's an increased level of production (more units of goods or services can be produced), yet with fewer input or proportionate savings costs.

Also, The long-run average cost (LRAC) curve represents the firm's lowest cost per unit at each level of production, assuming the factors of production chosen are variable and thus, being the optimal factor of production mix.

Hence,The falling long-run average cost (LRAC) is in essence an advantageous or efficiencies in cost or production that results in increased level of output for a firm.