If long-run average total cost decreases as output increases, this is due to

A) declining average fixed costs.
B) the law of diminishing returns.
C) economies of scale.
D) externalities.

Diseconomies of Scale

The condition in which a firm’s costs per unit of output increase as the firm increases in size or scale of operation.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, typically characterized by a reduction in average cost per unit when production is increased.

Externalities

Costs or benefits that result from an economic activity and affect third parties who did not choose to incur that cost or benefit.