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Question
Jamal owns a coffee roasting company. He buys raw coffee beans, roasts them, grinds them, and sells them to stores. He recently moved into a larger factory so that he can sell coffee to more stores. How would Jamal know if he is experiencing constant returns to scale from increasing the size of his factory?
a. His long-run average cost per pound of coffee remains the same.
b. His long-run total cost of roasting coffee remains the same.
c. His long-run total cost of roasting coffee decreases.
d. His long-run average cost per pound of coffee increases.
e. His long-run average cost per pound of coffee decreases.
Answer
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