Narrbegin Exhibit 6.9 Cost curves
-In Exhibit 6.9, the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

Question

Narrbegin Exhibit 6.9 Cost curves  
-In Exhibit 6.9, the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4000?

Quizplus · Accepted Answer

The U-shape of the LRAC curve indicates that as quantity increases from 0 to 4000, the firm experiences economies of scale (the downward sloping part of the curve), followed by constant returns to scale (the bottom of the curve), and finally diseconomies of scale (the upward sloping part of the curve). Therefore, option C is the correct choice.

Narrbegin Exhibit 6.9 Cost Curves