Figure 7-10
-The typical average cost curve
A)continually declines as output increases.
B)is horizontal.
C)continually increases as output increases.
D)first declines to a minimum and then increases as output increases.

Question

Figure 7-10 
-The typical average cost curve
A)continually declines as output increases. 
B)is horizontal. 
C)continually increases as output increases. 
D)first declines to a minimum and then increases as output increases.

Quizplus · Accepted Answer

The typical average cost curve first declines to a minimum and then increases as output increases. This is due to economies of scale initially taking effect, but then eventually diminishing as output increases and diseconomies of scale set in.

Figure 7-10 -The Typical Average Cost Curve