Final answer:
The long-run average cost curve will be decreasing for a firm's production technology that exhibits increasing returns to scale at all levels of output. This decrease signifies economies of scale, wherein larger outputs result in lower average costs of production.
Step-by-step explanation:
If a firm's production technology exhibits increasing returns to scale for all levels of output, then the long-run average cost curve (LRAC) will be decreasing. This is because increasing returns to scale indicate that when all inputs are increased, output increases by a larger proportion, leading to a decline in the average cost of production as output increases. The downward-sloping LRAC curve is characteristic of economies of scale, as opposed to a flat LRAC curve that represents constant returns to scale, or an upward-sloping LRAC curve that indicates diseconomies of scale.
In the context of the long-run average cost curve, a firm experiencing increasing returns to scale will continually see a reduction in average costs as it expands. This is in contrast to a situation with constant returns to scale, where average costs remain steady regardless of the scale of production, or diseconomies of scale, where average costs increase as the firm expands its production.