A. reducing average cost as production increases
B. benefiting from the activities of other firms
C. maximizing profits as production increases
D. having an upward-sloping average cost curve
Correct Answer:
Option A – reducing average cost as production increases
Explanation
As long as the Long-run average cost curve is declining, then internal economies of scale are being exploited. If LRAC is falling when output is increasing, then the firm is experiencing economies of scale.
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