Answer to Question #118728 in Microeconomics for Manpreet Suaan

Question

All of the following, except one, would result in lower average cost. Which is the exception? A. An increase in output if the firm was operating below its capacity output. B. Building a larger plant if the firm was experiencing increasing returns to scale. C. Down-sizing the scale of operations if the firm was experiencing diseconomies of scale. D. Down-sizing the scale of operations if the firm was experiencing constant returns to scale.

Answer 1

 D. Down-sizing the scale of operations if the firm was experiencing constant returns to scale.