Concept:In the long run, a fall in average cost is caused by increasing returns to scale.
Explanation:In the long run, all factors of production are variable.
A firm can expand every input as it grows.
When inputs are increased, output may rise more than proportionately.
This is known as increasing returns to scale.
As a result, the average cost of producing each unit falls.
This explains why the long-run average cost curve slopes downward.
Decreasing average fixed cost only applies in the short run, when fixed costs still exist.
Diminishing average returns and decreasing marginal returns are short-run phenomena caused by fixed factors.
Hence, they cannot explain a long-run reduction in average cost.
Answer:A. increasing returns to scale