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

-If a firm experiences economies of scale throughout, it will have a horizontal long-run average-total-cost curve.

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
 
-If a firm experiences economies of scale throughout, it will have a horizontal long-run average-total-cost curve.

Quizplus · Accepted Answer

Economies of scale imply that as a firm increases production, the average total cost of production decreases. A horizontal long-run average-total-cost curve would indicate constant returns to scale, not economies of scale.

The Figure Given Below Shows Three Short Run Average Total