Which of the following statements is true?

Question

Quizplus · Accepted Answer

The downward-sloping portion of the long-run average cost curve indicates the presence of economies of scale, as the firm is able to produce more output at a lower cost per unit due to factors such as specialization and technology. In the short run, a firm is typically constrained by fixed inputs like capital and cannot vary all its inputs. In the long run, all inputs are potentially variable as the firm can adjust its capital, labor, and other factors. The long-run average cost curve is U-shaped, with the downward sloping portion indicating economies of scale and the upward sloping portion indicating diseconomies of scale as the firm becomes too large and faces greater coordination and communication challenges.

Which of the Following Statements Is True