Which of the following shapes are used to describe the long-run average cost curve? A. S-shape B.…
In microeconomic cost theory, the Long-Run Average Cost (LAC) curve is traditionally depicted as U-shaped (D) due to economies of scale followed by diseconomies of scale,…
Choose your answer
Which of the following shapes are used to describe the long-run average cost curve?
A. S-shape
B. L-shape
C. V-shape
D. U-shape
E. W-shape
Answer and explanation
Correct answer B
In microeconomic cost theory, the Long-Run Average Cost (LAC) curve is traditionally depicted as U-shaped (D) due to economies of scale followed by diseconomies of scale, while empirical studies of modern manufacturing industries show that the LAC curve is typically L-shaped (B) as unit costs decline initially and then remain flat at large scales.
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UGC NET Commerce