A LRAC Curve Is U- Shaped If

question 10

Multiple Choice

A LRAC curve is U- shaped if:

• A)input prices fall at low output levels and rise at higher levels.
• B)factors of production become more productive as output expands.
• C)decreasing returns to scale follow increasing returns to scale.
• D)the production function is homothetic.

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Definitions:

Short Run

A period in economics during which at least one input (like capital) is fixed, focusing on immediate effects rather than long-term outcomes.

Profit-Maximizing Price

The price level at which a firm can achieve the maximum possible profit, calculated by equating marginal cost with marginal revenue.

Total Revenue

The cumulative revenue a company collects from the sale of goods or offering of services during a given time frame.

Gas Station

A retail establishment that sells fuel and engine lubricants for motor vehicles.