Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.
-Refer to Figure 13-9. At levels of output between M and N, the firm experiences
A)economies of scale.
B)diseconomies of scale.
C)constant returns to scale.
D)both the benefits of specialization and diminishing marginal productivity.

Question

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. At levels of output between M and N, the firm experiences
A)economies of scale. 
B)diseconomies of scale. 
C)constant returns to scale. 
D)both the benefits of specialization and diminishing marginal productivity.

Quizplus · Accepted Answer

At levels of output between M and N, the average total cost curve is relatively flat, indicating constant returns to scale. This means that as the firm increases its scale of production, there is no significant change in its average total cost.

Figure 13-9 the Figure Below Depicts Average Total Cost Functions for a for a Firm