he long-run average total cost of producing 100 units of output is $4, while the long-run average cost of producing 110 units of

Question

DedPeter [7]

4 years ago

9

he long-run average total cost of producing 100 units of output is $4, while the long-run average cost of producing 110 units of

output is $4. These numbers suggest that between 100 and 110 units of output, the firm producing this output has

Business

1 answer:

Firlakuza [10] · Answer 1 · 2022-01-24T13:31:19+03:00

Answer:

Constant Return to Scale

Explanation:

Based on the information given the numbers

suggest that between 100 and 110 units of output, the firm producing this output has CONSTANT RETURN TO SCALE.

Constant Return to Scale occurs in a situation where the proportional increase in all the inputs is as well equal to the proportional increase in output which means the returns to scale are constant , which is why RETURNS TO SCALE help to describe all what happens to long run returns when the scale of production increases.

Therefore Constant returns to scale often occur when the output increase in exactly the same way or the same proportion as the factors of production.