Question: Trey notices that when he increases output from Q 1 to Q 2 , average total cost is unchanged. It is likely that over this
Trey notices that when he increases output from Qto Q average total cost is unchanged. It is likely that over this range of output, if he doubles his inputs,
a output would increase by less than times, so the production function exhibits economies of scale
b output would double, so the production function exhibits constant returns to scale. Answer
c output would more than double, and so the production function is increasing returns to scale
d the firm must be at its minimum efficient scale.
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