The long-run average total cost curve:
A. displays declining unit costs so long as output is increasing.
B. indicates the lowest unit costs achievable when a firm has had sufficient time to alter plant
size.
C. has a shape that is the inverse of the law of diminishing returns.
D. can be derived by summing horizontally the average total cost curves of all firms in an
industry.
Answer: B
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In the short run, which of the following is not correct?
a. Increasing the money supply increases the demand for goods and services. b. Increasing the money supply encourages firms to hire more workers. c. Lowering the money supply leads to a higher level of unemployment. d. Policies that encourage higher employment will also induce a lower rate of inflation.
The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of
a. the Board of Governors. b. the FOMC. c. the regional Federal Reserve Bank presidents. d. the U.S. Treasury.