If all factors are variable in the long run firms; will experience?

A. decreasing returns to scale
B. increasing returns to scale
C. diminishing returns
D. economies of scale

Correct Answer:

Option B – increasing returns to scale

Explanation

In the longrun, all production factors are variable (changes) and a firm operating in the longrun would enjoy increasing returns to scale because they will be operating at a higher level of output with lower cost.