AP Microeconomics Unit 3 Practice Test

There are economies of scale when

The firm is earning economic profits, and firms will enter the industry in the long run. Price = minimum average variable cost. price < AVC. long-run average total cost decreases as output increases.

Correct Answer:

long-run average total cost decreases as output increases.

Explanation:

Correct answer: long-run average total cost decreases as output increases.

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