The short-run average total cost (ATC) curve of a firm will tend to be U-shaped because
a. larger firms always have lower per-unit costs than smaller firms.
b. at small output rates, average fixed costs (AFC) will be high, while at large output rates, marginal cost (MC) will be high.
c. diminishing returns will be present when output is small, while high AFC will push average total cost to high levels when output is large.
d. diseconomies of scale will be present at both small and large output rates.
B
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Answer the following statement true (T) or false (F)
1) The availability heuristic refers to people purchasing what is most easily accessible. 2) The self-serving bias causes people to act only in their self-interest. 3) The overconfidence effect exists when people underestimate their chances of being wrong. 4) Framing effects may cause the same person to view the same new situation differently depending on whether that new situation makes him or her better or worse off.
_______________ —a term referring to the government practice of enacting laws to regulate prices instead of letting market forces determine prices.
a. Price ceiling b. Price floor c. Price control d. Subsidies