If a firm has a U-shaped long-run average cost curve,
A. its fixed cost rises as output rises.
B. it must have increasing returns to scale at low levels of production and decreasing returns to scale at high levels of production.
C. it must have increasing returns to each input at low levels of production and decreasing returns to each input at high levels of production.
D. the firm can maximize its output by operating at the point of minimum long-run average cost.
Answer: B
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