Figure 13-5
This figure depicts average total cost functions for a firm that produces automobiles.

-Refer to Figure 13-5.At levels of output below M,what does the firm experience
A)economies of scale
B)diseconomies of scale
C)economic profit
D)accounting profit

Question

Figure 13-5
This figure depicts average total cost functions for a firm that produces automobiles.
 
-Refer to Figure 13-5.At levels of output below M,what does the firm experience
A)economies of scale 
B)diseconomies of scale 
C)economic profit 
D)accounting profit

Quizplus · Accepted Answer

At levels of output below M, the average total cost is decreasing. This indicates that the firm is experiencing economies of scale, where the cost per unit is decreasing as output increases.

Figure 13-5 This Figure Depicts Average Total Cost Functions for a Firm