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.