If a Firm Has a U-Shaped Long-Run Average Cost Curve

question 199

Multiple Choice

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.

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Definitions:

Cenozoic Era

Span of geologic time extending from 66 mya to the present; marked by diversification of mammals, birds, insects, and flowering plants. Divided into Paleogene (66–23 mya), Neogene (23–2.6 mya), and Quaternary (2.6 mya to present) periods.

Chemical Evolution

The gradual process by which simple chemical compounds give rise to more complex molecules, eventually leading to the emergence of life.

Brachiate Primates

Primates that move by swinging with their arms from one handhold to another, also known as brachiation.

Gibbons

A group of primates known for their ability to brachiate and their distinctive whooping calls. They are smaller than great apes and live in the forests of Southeast Asia.