2 Economists shift back and forth between speaking in physical terms (“increasing returns”) and
cost terms (“decreasing costs”). As the text explains, the same relationship can be expressed either
way.
underutilizing it whenever the gains from using the bigger plant
are enough to offset the costs of underutilizing the plant. If
there are gains from building bigger plants (i.e., if LRAC is
declining), some underutilization is always justified.