The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3

-Economies of scale exist when the long-run average-total-cost curve is positively sloped.

Question

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
 
-Economies of scale exist when the long-run average-total-cost curve is positively sloped.

Quizplus · Accepted Answer

Economies of scale exist when the long-run average-total-cost curve is negatively sloped, indicating that as the firm increases production, the average cost per unit decreases. A positively sloped LRATC curve would indicate diseconomies of scale, where the cost per unit increases as production increases.

The Figure Given Below Shows Three Short Run Average Total