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October 22, 2014

Homework Help: Microeconomics

Posted by Melissa on Monday, October 30, 2006 at 8:47pm.

If a firm has a U-Shaped long-run average cost curve,
a.) its fixed cost rises as output rises.
b.) it must have increasing returns to scale at low levels or production and decreasing returns to scale at high levels of production.
C.) it must have increasing returns to each input at low levels of production and decreasing returns to each input at high levels of production.
D.) the firm can maximize its output by operating at the point of minimum long run average.

You have given four options which are are possisible implication of the U-shape average cost curve. Here, answer is option (c)

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