Shawn owns a stroller store.Last year his average cost of selling a stroller was $1,000.If he expands the size of his store this year and sees his average cost increase to $1,050,his long-run average total cost curve should be

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Quizplus · Accepted Answer

As the average cost of selling a stroller increases from $1000 to $1050, it indicates an increase in the cost of production, such as rent, labor, and raw materials. Therefore, the long-run average total cost curve should be upward sloping, indicating that the cost of producing each stroller increases with the production scale. This suggests that as the store expands, its production cost per unit may increase, indicating economies of scale diminishing. Hence, option E is the best choice.

Shawn Owns a Stroller Store