If a company is experiencing economics of scale then its LRA

If a company is experiencing economics of scale, then its LRATC is _____.

horizontal

downward sloping

upward sloping

vertical

Solution

Answer is Downward sloping.

Explanation:

Long run Average total cost will go on reducing till the time economies of scale is applicable to the production. The economies of scale means the additional production happen with additional one unit of factor is more than before. Hence, the marginal cost will go on reducing, resulting in reduction in average total cost.