Suppose the sweater manufacturing technology enables sweater makers to experience constant returns to scale over the range between 4,000 and 10,000 . If their long-run average total cost curve is U-shaped, what must be true?
a. Long-run average costs will be lowest when the firm produces as many sweaters as possible

b. The total cost of producing 10,000 sweaters is more than the total cost of producing 11,000.
c. The total cost of producing 2,000 sweaters is half the total cost of producing 4,000.
d. The ATC of producing 3,000 sweaters is the same as the ATC of producing 11,000.
e. Producing fewer than 4,000 or more than 10,000 sweaters is not efficient.


E

Economics

You might also like to view...

Distinguish between the short-run and long-run Phillips curves

What will be an ideal response?

Economics

The Social Security Administration estimates that the Social Security Trust Fund will ________ and that the Medicare Trust Fund will ________

A) become fully funded by 2036; become fully funded by 2024 B) continue to get smaller as the number of retirees increases; start to grow once funds from Obamacare are funneled to the program C) grow slowly as more workers retire; decline slowly as medical costs rise D) run out of funds in about 20 years; run out of funds in about 10 years

Economics

Since 1950, recessions in the United States

A) have become less severe than before 1950. B) have become more severe than before 1950. C) are about as severe as they were before 1950. D) have not occurred.

Economics

A permanent marginal tax decrease is likely to

A) shift the short-run aggregate supply curve to the left and the long-run aggregate supply curve to the right. B) shift both the short-run and the long-run aggregate supply curves to the left. C) shift the short-run aggregate supply curve to the right, and the long-run aggregate supply curve to the left. D) shift both the short run and the long run aggregate supply curves to the right.

Economics