Asked by khalid almaadeed on Jun 30, 2024
Verified
A firm experiencing constant economies of scale will have a long-run average cost curve that is:
A) upward sloping
B) vertical
C) downward sloping
D) horizontal
Economies of Scale
Cost advantages that enterprises obtain due to their scale of operation, typically resulting in lower per-unit costs with increased production.
Average Cost Curve
The average cost curve is a graphical representation showing how the average cost per unit of output varies with the level of output, typically U-shaped due to economies and diseconomies of scale.
- Evaluate the impact of returns to scale on long-run average costs.
- Analyze the link between economies of scale, diseconomies of scale, and long-run cost curves' patterns.
Verified Answer
Learning Objectives
- Evaluate the impact of returns to scale on long-run average costs.
- Analyze the link between economies of scale, diseconomies of scale, and long-run cost curves' patterns.
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