Economics, 3rd Edition

economies of scale

 which occur when long-run average total cost declines as output increases.

constant returns to scale

 the property whereby long-run average total cost stays the same as the quantity of output changes

economies of scale

 the property whereby long-run average total cost falls as the quantity of output increases

If the doubling of factor inputs leads to an increase in total costs (to 

€10,000, for example) which is 

greater than the increase in output (assume this is 4,000) the firm is said to experience decreasing returns 

to scale. In this situation the average cost per pizza would now be 

€2.50 each. When long-run average total 

cost rises as output increases, there are said to be