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:

Plantar Surface

The bottom part of the foot that comes in direct contact with the ground during standing or walking.

Foot

The lower extremity of the leg below the ankle, on which a person stands or walks.

Antebrachial Region

The region of the human body that corresponds to the forearm, extending from the elbow to the wrist.

Forearm

The part of the arm located between the elbow and the wrist, composed of two bones (the radius and ulna) and various muscles.