Asked by Seniha Elcik on Jul 03, 2024
Verified
If an industry's long-run average total cost curve has an extended range of constant returns to scale, this implies that
A) technology precludes both economies and diseconomies of scale.
B) the industry will be a natural monopoly.
C) both relatively small and relatively large firms can be viable in the industry.
D) the industry will comprise a very large number of small firms.
Extensive Range
A wide scope or variety of something, covering a broad spectrum.
Constant Returns to Scale
A situation in which increasing the scale of production inputs results in a proportional increase in the output.
Long-run Average Total Cost
The cost per unit of output incurred when all factors of production, including physical capital, are variable.
- Absorb the theory of economies and diseconomies of scale, including their implications for long-run average total costs.
Verified Answer
CM
Ceaser MenchacaJul 10, 2024
Final Answer :
C
Explanation :
An extended range of constant returns to scale implies that the industry can support firms of various sizes operating efficiently, as costs do not increase or decrease with the scale of operation within this range. This allows both small and large firms to coexist viably.
Learning Objectives
- Absorb the theory of economies and diseconomies of scale, including their implications for long-run average total costs.
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