Asked by
Natalie Rengifo
on Dec 11, 2024
Verified
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.
U-shaped Curve
A graphical representation showing a relationship where initial decreases are followed by increases, resulting in a curve shaped like the letter "U."
Long-run
A period in which all factors of production and costs are variable, allowing firms to adjust all input levels and technology to find the most efficient scale of operations.
- Detail the impact that economies and diseconomies of scale have on the financial layouts of firms.
- Describe the specific conditions that lead to firms achieving economies of scale.
Verified Answer
JS
Learning Objectives
- Detail the impact that economies and diseconomies of scale have on the financial layouts of firms.
- Describe the specific conditions that lead to firms achieving economies of scale.