The following table shows the short-run total cost data for a firm. All of the following are correct, except that the firm has

Question

The following table shows the short-run total cost data for a firm.  All of the following are correct, except that the firm has

Quizplus · Accepted Answer

The firm experiences decreasing average total cost as output increases, indicating economies of scale. Option B is correct as fixed costs remain constant at $80 throughout the table. Option C is incorrect as marginal cost decreases until reaching a minimum and then increases, indicating diminishing returns to variable inputs. Option D is incorrect as average fixed cost is $20 at 2 units of output, not 4.

The Following Table Shows the Short-Run Total Cost Data for a Firm