Which statement correctly describes increasing returns to scale and its effect on long-run average cost (LRAC)?

Which statement correctly describes increasing returns to scale and its effect on long-run average cost (LRAC)?

• A. Increasing returns to scale occur when output rises more than proportionally with inputs, lowering LRAC.
• B. Increasing returns to scale cause LRAC to rise as output increases.
• C. Constant returns to scale cause LRAC to rise.
• D. Decreasing returns to scale imply that doubling inputs more than doubles output.

Answer: (A)