If Production Displays Economies of Scale, the Long-Run Average Cost

question 104

Multiple Choice

If production displays economies of scale, the long-run average cost curve is

• A)above the short-run average total cost curve.
• B)downward sloping.
• C)upward sloping.
• D)below the long-run marginal cost curve.

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Definitions:

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments.

Upper Bound

The highest value that a mathematical function, statistical operation, or range of variables can reach under specific conditions.

Tax Rate

The calculation basis on which taxes are applied to individual or corporate income.

Financial Break-Even

The point at which a project or company generates enough income to cover all its financial costs, including interest and principal repayments.