When a Firm Is on the Flat Portion of Its

question 14

Multiple Choice

When a firm is on the flat portion of its long-run ATC curve,

• A) it is experiencing constant returns to scale.
• B) changing its firm size will not affect its total cost per unit.
• C) it is capturing the lowest average total costs possible in the industry.
• D) All of these are possibly true.

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Definitions:

Barriers To Entry

Economic, procedural, regulatory, or technological factors that obstruct or restrict the ability of new competitors to enter and operate in a market.

Price Discrimination

A strategy where a provider sells identical or similar goods or services at varied prices in diverse markets.

Efficient Output

The level of production at which a firm or economy can produce goods at the lowest average cost, maximizing resource use without waste.

Market Price

The current price at which an asset or service can be bought or sold in a particular market.