Figure 13-9 the Figure Below Depicts Average Total Cost Functions for a for a Firm

question 403

Multiple Choice

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.
-Refer to Figure 13-9. The firm experiences constant returns to scale at which output levels?

• A)output levels less than M
• B)output levels between M and N
• C)output levels greater than N
• D)All of the above are correct as long as the firm is operating in the long run.

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Definitions:

Marginal Cost

The cost of producing one additional unit of a product.

Industry Price

The average or standard price of goods or services within a specific industry, influenced by factors like demand, supply, and competition.

Returns to Scale

The rate at which output increases as inputs are increased proportionately.

Industry Supply Curve

A graphical representation that shows the relationship between the price of a good and the total output of that good by all firms in the industry.