Microeconomics

Long-run average total costs curves are often U-shaped:

A: For the same reasons that average total cost curces are often U-shaped.

B: Because of constant returns to scales.

C: Because of increasing coordination problems at low levels of production and increasing specailization of workers at high levels of production

D: Because of increasing specialization of workers at low levels of production and increasing coordination problems at high levels of production.

I know B is not the answer. C and D don't seem to be right either. I picked A.

  1. 2
asked by Gigi
  1. A doesnt make sense, and, as you surmised, B and C are incorrect. Go with D. At low levels, increase specialization can improve productivity and thus lower costs. However, at higher levels of output, coordination becomes a major issue, and average productivity falls. (Other reasons too can also explain the U shape).

    posted by economyst

Respond to this Question

First Name

Your Response

Similar Questions

  1. Microeconomics help please (urgent)

    True or False? Explain your reasoning. a. The short-run average total cost can never be less than the long-run average total cost. b. The short-run average variable cost can never be less than the long-run average total cost. c.
  2. economics

    For the total variable cost (TVC), draw a positive total fixed cost (TFC) and total cost (TC) curves. Then derive the associated marginal cost (MC), average total cost (ATC), average variable (AVC) and average fixed cost (AFC)
  3. Economics

    PROBLEM SOLVING 1: "ANDREA'S SOFTWARE BUSINESS" I. Complete the following table: DO THE MATH Data Number of Programs Total Fixed Costs Total Variable Costs Total Costs Marginal Costs Average Fixed Costs Average Variable Costs
  4. Microecomics

    Assume two firms have the same total costs of production. Firm A’s average variable cost if $5 per unit and firm B’s average variable cost is $7. Both firms have an average total cost of $8. If the current market price is $6
  5. Economics

    10. An industry currently has 100 firms, all of which have fixed cost of $16 and average variable cost as follows: Quantity / Average variable cost: (1/$1),(2,$2), (3,$3), (4,$4), (5,$5), and (6,$6) b. The price is currently $10.
  6. economics

    This is going to be really long, but I want to see if my answers are correct. This is problem number 10.10 in my Intermediate Microeconomics book. A perfectly competitive painted necktie industry has a large number of potential
  7. Economic

    How is income distribution affected in monopolies? The market for fertilizer is perfectly competitive. Firms in the market are producing output, but they are currently making economic losses. a. How does the price of fertilizer
  8. Business Economics

    When we are given an expression for the Short Run Total Cost Curve (for eg: 8 + 3Q - 1.5Q^2 + 0.25Q^3), how do you derive expressions for the following: 1. Average Fixed Costs 2. Average Viarable Costs Curve 3. Marginal Costs
  9. Economics

    The market for fertilizer is perfectly competitive. Firms in the market are producing output, but they are currently making economic losses. a. How does the price of fertilizer compare to the average total cost, the average
  10. ECON

    A pure monopolist sells output for $4.00 per unit at the current level of production. At this level of output, the marginal cost is $3.00, average variable costs are $3.75, and average total costs are $4.25. The marginal revenue

More Similar Questions