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

question 198

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, AFC will be high, while at large output rates, MC will be high.
• C) diminishing returns will be present when output is small, while high AFC will push per-unit cost to high levels when output is large.
• D) diseconomies of scale will be present at both small and large output rates.

---

Definitions:

Accommodation

in psychology, the process of adapting or adjusting one's cognitive schemas and perceptions to incorporate new information or experiences.

Cognitive Process

The mental actions or operations involved in learning, thinking, and understanding; it encompasses perception, memory, judgment, and reasoning.

Disequilibrium

A state of imbalance or instability, often used in economics to describe markets where supply and demand are not in balance, and in psychology, to describe the conflict experienced when existing knowledge does not fit with new information.

Imitative Capacity

The ability of an individual to mimic or reproduce actions, behaviors, or sounds observed from others.