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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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