Suppose Bill's Bike Works experiences economies of scale up to a certain output and diseconomies of scale beyond that output. Its long- run average cost curve is likely to:

Question

Quizplus · Accepted Answer

The long-run average cost curve is U-shaped because it initially slopes downward due to economies of scale and then slopes upward due to diseconomies of scale.

Suppose Bill's Bike Works Experiences Economies of Scale Up to a Certain