The U-shapes of the long-run and short-run average total cost curves
A)are due to diminishing marginal returns.
B)occur only in rare circumstances.
C)have the same cause.
D)have different causes.
E)must always occur.

Question

Quizplus · Accepted Answer

The U-shapes of the long-run and short-run average total cost curves have different causes. In the short run, the U-shape is primarily due to diminishing marginal returns to the variable input. In the long run, where all inputs are variable, the U-shape reflects economies and diseconomies of scale.

The U-Shapes of the Long-Run and Short-Run Average Total Cost