The Short-Run Average Total Cost (ATC) Curve of a Firm

question 207

Multiple Choice

The short-run average total cost (ATC) curve of a firm will tend to be U-shaped because

• A) larger firms always have lower per-unit costs than smaller firms.
• B) at small output rates, average fixed costs (AFC) will be high, while at large output rates, marginal cost (MC) will be high.
• C) diminishing returns will be present when output is small, while high AFC will push average total cost to high levels when output is large.
• D) diseconomies of scale will be present at both small and large output rates.

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Definitions:

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