Chloe's Café sells gourmet cinnamon rolls. In the long run, the café incurs a total cost of $500 to produce 1,000 cinnamon rolls. If Chloe's Café exhibits constant returns to scale between 1,000 and 1,500 cinnamon rolls, the long-run average total cost for 1,250 cinnamon rolls is

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Quizplus · Accepted Answer

With constant returns to scale, the long-run average total cost remains the same as output increases. Therefore, the cost per cinnamon roll remains $0.50 ($500/1000), even at 1,250 rolls.

Chloe's Café Sells Gourmet Cinnamon Rolls