Question

Constant returns to scale exist over the range of output for which the long-run average cost is:

a) neither rising nor falling.
b) falling.
c) rising.
d) one of these.

Answer 1

Constant returns to scale exist over the range of output for which the long-run average cost is neither rising nor falling.

Step-by-step explanation:

The concept being discussed is related to the long-run average cost curve in economics, specifically under the premise of constant returns to scale. Constant returns to scale occur when all inputs to production are increased, and there is no change in the long-run average cost of production. According to the information provided, constant returns to scale exist over the range of output for which the long-run average cost is neither rising nor falling. This is identified on the long-run average cost curve where there is a flat portion, around Q3, indicating that economies of scale have been exhausted, and the average cost remains unchanged as the scale of production increases or decreases.