Suppose the sweater manufacturing technology enables sweater makers to experience constant returns to scale over the range between 4,000 and 10,000. If their long-run average total cost curve is U-shaped, what must be true?
A) Long-run average costs will be lowest when the firm produces as many sweaters as possible.
B) The total cost of producing 10,000 sweaters is more than the total cost of producing 11,000.
C) The total cost of producing 2,000 sweaters is half the total cost of producing 4,000.
D) The ATC of producing 3,000 sweaters is the same as the ATC of producing 11,000.
E) Producing fewer than 4,000 or more than 10,000 sweaters is not efficient.
Correct Answer:
Verified
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