Final answer:
The statement is true; economies of scale refer to the decrease in long-run average total cost as output increases. It contrasts with diseconomies of scale, where costs increase as a firm grows too large and difficult to manage.
Step-by-step explanation:
The statement 'When, for a firm, longrun average total cost decreases as the quantity of output increases, we have a situation of economies of scale' is true. Economies of scale occur when a company or firm experiences a reduction in per-unit costs as the scale of production and the quantity of output increases. This situation can often be observed in various industries and businesses, such as warehouse stores like Costco or Walmart, where a larger scale of operation can lead to lower average costs when compared to smaller operations.
Different from this is the concept of diseconomies of scale, which refers to the phenomenon where the long-run average cost increases as the quantity of output increases. Diseconomies of scale can happen when a firm becomes too large and complex, making it difficult to manage efficiently, leading to higher average costs due to factors like miscommunication and the disruption of work flow.