Table 13-1

-Refer to Table 13-1.For the firm whose production function and costs are specified in the table,its average-total-cost curve is
A) constant.
B) decreasing.
C) increasing.
D) U-shaped.

Question

Table 13-1
 
-Refer to Table 13-1.For the firm whose production function and costs are specified in the table,its average-total-cost curve is
A) constant. 
B) decreasing. 
C) increasing. 
D) U-shaped.

Quizplus · Accepted Answer

The average-total-cost curve is U-shaped, as it initially decreases due to increasing returns to scale, reaches a minimum at the point of constant returns to scale, and then increases due to decreasing returns to scale. This is reflected in the given table, where the ATC decreases from 10 to 5 units of output, remains constant at 5 units of output, and then increases beyond 15 units of output.

Table 13-1 -Refer to Table 13-1.For the Firm Whose Production Function and Whose