Match the items of the List – I with those of List – II and suggest the correct code : List – I List –…
Matching the cost curves with their economic explanations: (a) Constant average cost over a range of output reflects built-in (ii) Reserve capacity; (b) Average cost…
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Match the items of the List – I with those of List – II and suggest the correct code :
List – I
List – II a. Constant average cost over a range of output i. Economic capacity b. Average cost becomes constant momentarily ii. Reserve capacity c. Normal average cost is a U-shaped curve iii. Production and Managerials costs effects d. Modern Long-run average cost is L-shaped iv. Economies and Diseconomies
Answer and explanation
Correct answer D
Matching the cost curves with their economic explanations: (a) Constant average cost over a range of output reflects built-in (ii) Reserve capacity; (b) Average cost becoming constant momentarily at the minimum point of a U-shaped AC curve represents (i) Economic capacity; (c) Traditional U-shaped average cost is caused by (iv) Economies and Diseconomies; and (d) Modern L-shaped LRAC is explained by (iii) Production and Managerial costs effects. Thus, '(a)-ii, (b)-i, (c)-iv, (d)-iii' is correct.
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UGC NET Commerce