In some industries, like insurance, both small and very large firms coexist and compete quite effectively in the market. This indicates that the long-run average total cost curve in these industries
A) is "U" shaped.
B) is downward sloping over all levels of output.
C) exhibits constant returns to scale over a wide range of output.
D) exhibits diseconomies of scale beginning at a low rate of output.

Question

Quizplus · Accepted Answer

The coexistence of both small and large firms suggests that the industry can efficiently operate at various scales, indicating constant returns to scale over a wide range of output.

In Some Industries, Like Insurance, Both Small and Very Large