Exhibit 6-16 Long-run average cost curves Which firm in Exhibit 6-16 displays a long-run average cost curve with economies of scale throughout the range of output shown?

Question

Exhibit 6-16  Long-run average cost curves  Which firm in Exhibit 6-16 displays a long-run average cost curve with economies of scale throughout the range of output shown?

Quizplus · Accepted Answer

Firm C displays a long-run average cost curve with economies of scale throughout the range of output shown. This is because the curve slopes downwards as output increases, indicating that the firm is experiencing decreasing long-run average costs due to factors such as increased specialization, better technology, and more efficient use of resources. Firms A and B show initial economies of scale but eventually experience constant returns to scale and diseconomies of scale, respectively.

Exhibit 6-16 Long-Run Average Cost Curves Which Firm in Exhibit