The -shape of the long-run average total cost curve is primarily due to:
A)technological change.
B)economies and diseconomies of scale.
C)fixed costs.
D)diminishing returns.

Question

The  -shape of the long-run average total cost curve is primarily due to:
A)technological change. 
B)economies and diseconomies of scale. 
C)fixed costs. 
D)diminishing returns.

Quizplus · Accepted Answer

The long-run average total cost curve is primarily due to economies and diseconomies of scale. As firms expand their production, they can benefit from economies of scale, which result in lower average costs. However, if they expand too much, they may face diseconomies of scale, resulting in higher average costs. Thus, the shape of the long-run average total cost curve reflects the balance between economies and diseconomies of scale.

The -Shape of the Long-Run Average Total Cost Curve