The Figure Given Below Shows Three Short Run Average Total

question 51

Multiple Choice

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3

-Which of the following statements is true?

• A)When long-run average total costs are increasing, the firm enjoys economies of scale.
• B)Most industries exhibit long-run average costs that are shaped like an upside-down U.
• C)Constant returns to scale occur when the short-run average-total-cost curve is horizontal.
• D)When long-run average total costs are increasing, the firm has diseconomies of scale.
• E)Constant returns to scale are never present in the real world.

---

Definitions:

Members' Voluntary Winding Up

A process initiated by the shareholders of a solvent company to voluntarily dissolve and liquidate its assets under the supervision of a liquidator.

Voluntary Administration

A process for insolvent companies to resolve debt issues with creditors through an independent administrator.

Circulating Security Interest

A floating charge over all of a company.

Floating Charge

A security interest over a fluctuating pool of assets, such as inventory or receivables, which allows the borrower to use the assets in the course of business.