Suppose Heidi's Ice Cream experiences economies of scale up to a certain point and diseconomies of scale beyond that point. Its long-run average cost curve is most likely to be
A) upward sloping to the right.
B) downward sloping to the right.
C) horizontal.
D) U-shaped.

Question

Quizplus · Accepted Answer

The long-run average cost curve is U-shaped due to economies of scale causing costs to decrease initially, and diseconomies of scale causing costs to increase after a certain point.

Suppose Heidi's Ice Cream Experiences Economies of Scale Up to a Certain