ECONOMICS
TECHNOLOGY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
the long-run ATC curve falls
|
|
|
MC intersects ATC
|
|
|
the long-run ATC curve rises
|
|
|
average fixed costs will rise
|
Detailed explanation-1: -Economies of scale exist when long run average total cost decreases as output increases, diseconomies of scale occur when long run average total cost increases as output increases, and constant returns to scale occur when costs do not change as output increases.
Detailed explanation-2: -Answer: While analyzing the U-shape of a long run average cost curve, we can identify that the rising part of the LAC curve is due to both internal and external diseconomies of scale.
Detailed explanation-3: -Diseconomies of scale occur in the long-run but not the short-run. This is because some inputs are fixed in the short-run and the cause of the increasing average total cost in the short-run is likely due to diminishing returns from increasing variable inputs.
Detailed explanation-4: -Diseconomies of scale typically happen when the production process becomes less efficient, leading to a higher cost for producing additional units of output. Since diseconomies of scale lead to higher marginal costs, they typically also lead to a company experiencing reduced profitability.
Detailed explanation-5: -The upward-sloping portion of a long-run cost curve illustrates diseconomies of scale.