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Suppose that a firm, operating efficiently, doubles the size of its operations and discovers that, as a result, its average cost of operations has increased.
Suppose that a firm, operating efficiently, doubles the size of its operations and discovers that, as a result, its average cost of operations has increased. What does this imply?
A) Decreasing returns to scale are present
B) Increasing returns to scale are present
C) Constant returns to scale are present
D) The law of increasing marginal returns is operational
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