Exhibit 7.4

-Refer to Exhibit 7.4,which shows short-run average cost curves.Which curve shows the average cost curve for a large plant?
A)A to A'
B)B to A'
C)B to B'
D)C to B'
E)C to C'

Question

Exhibit 7.4
 
-Refer to Exhibit 7.4,which shows short-run average cost curves.Which curve shows the average cost curve for a large plant?
A)A to A' 
B)B to A' 
C)B to B' 
D)C to B' 
E)C to C'

Quizplus · Accepted Answer

The average cost curve for a large plant typically shows economies of scale at lower levels of output and diseconomies of scale at higher levels of output. This is represented by a U-shaped curve, which in this case is C to C', indicating initially decreasing average costs followed by increasing average costs as output increases.

Exhibit 7.4 -Refer to Exhibit 7.4,which Shows Short-Run Average Cost Curves.Which Curve