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    Question

    If a firm is experiencing economies of scale:

    A Its long-run average cost is increasing Correct Answer Incorrect Answer
    B Its long-run average cost is constant Correct Answer Incorrect Answer
    C Its long-run average cost is decreasing Correct Answer Incorrect Answer
    D It is producing less than its capacity Correct Answer Incorrect Answer

    Solution

    Explanation: Economies of scale mean that as a firm increases output, the long-run average cost falls due to factors like specialization and bulk purchasing.

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