The Long-Run Average-Total-Cost Curve Is U-Shaped Because

question 73

Multiple Choice

The long-run average-total-cost curve is U-shaped because:

• A)a firm initially experiences economies of scale and then diseconomies of scale.
• B)the law of diminishing returns to a factor sets in beyond a certain level of output.
• C)a firm initially experiences diseconomies of scale and then economies of scale.
• D)division of labor keeps labor productivity constant irrespective of expansion or contraction in production.
• E)efficiency of capital increases over a period of time.

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Definitions:

Depreciation

An accounting method of allocating the cost of a tangible asset over its useful life.

Insurance

A contract represented by a policy in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.

Schedule E

A tax form used to report income and losses from rental property, royalties, partnerships, S corporations, estates, and trusts.

Net Loss

The result when a company's or individual's expenses exceed their income.