A firm's average cost decreases in the long-run becau...
A firm's average cost decreases in the long-run because of
Increasing returns to scale
Diminishing average returns
Decreasing marginal returns
Decreasing average fixed cost
Correct answer is A
A firm's average cost decreases in the long-run because of the law of increasing returns to scale. Law of increasing returns to scale shows that as output increases, the average cost fall. The law is applied to the long run analysis of production.
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