The long-run average total cost curve is often bumpy because
A)capital can be varied only in tiny increments.
B)capital can often be varied only in large increments.
C)short-run average variable cost curves are bumpy.
D)short-run average total cost curves are bumpy
E)capital cannot be increased with labor at the same time.

Question

Quizplus · Accepted Answer

The long-run average total cost curve is bumpy because capital can often be varied only in large increments, not in tiny increments as in the short run. This creates discontinuities in the long-run cost function, resulting in a bumpy LAC curve.

The Long-Run Average Total Cost Curve Is Often Bumpy Because