Scale of production leads to lower costs every unit produced

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Q. Specify whether you agree or disagree with the subsequent statements. In brief explain your answer.

a. Increasing returns to scale refers to a situation where an increase in a firm's scale of production leads to higher cost every unit produced.

b. Constant returns to scale refers to a situation where an increase in a firm's scale of production has no effect on costs every unit produced.

c. Decreasing returns to scale refers to a situation where an increase in a firm's scale of production leads to lower costs every unit produced.

Reference no: EM139525

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