Which of the following is not an assumption made when constructing long- run cost curves?

Question

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The assumption that the firm experiences economies of scale is not made when constructing long-run cost curves. The long-run cost curves are derived based on the assumption that all factors are variable, firms choose the least-cost combination of inputs, the state of technology is constant, and the marginal physical product per dollar spent on each input is equalized across inputs. Economies of scale refer to the cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output. However, the long-run cost curve does not assume economies of scale throughout its entirety; it can exhibit different returns to scale (increasing, constant, or decreasing) at different points.

Which of the Following Is Not an Assumption Made When