Ting owns a diamond shop.Last year her average cost of selling a diamond was $900.If she expands the size of her store this year and sees her average cost decrease to $850,her long-run average total cost curve should be

Question

Quizplus · Accepted Answer

If Ting is able to decrease her average cost, it means that she is achieving economies of scale, which means her long-run average total cost curve should be downward sloping. As her production increases, her cost per unit decreases.

Ting Owns a Diamond Shop