A Manufacturer of Towels Finds That His Returns to Scale

question 55

Multiple Choice

A manufacturer of towels finds that his returns to scale are constant.Which of the following conclusions can be drawn?

• A)The long-run total cost curve is horizontal.
• B)The long-run average cost curve is horizontal.
• C)The long-run total cost curve is downward sloping.
• D)The long-run average cost curve is downward sloping.

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Definitions:

National Defense

The governmental provision of military forces and facilities intended to secure the nation against all potential enemies.

Government-Run

Entities, operations, or programs managed and operated by a government entity or its agents.

External Cost

Spillover effects that reduce the well-being of non-consenting parties.

Economic Efficiency

A condition in which resources are distributed to optimize the generation of goods and services.