Ask Question
15 May, 20:59

The short-run average total cost curve is U-shaped because 1. average fixed costs decline continuously as output increases. 2. of increasing and diminishing returns. 3. of economies and diseconomies of scale. 4. minimum efficient scale is encountered.

+2
Answers (1)
  1. 15 May, 23:54
    0
    2. of increasing and diminishing returns.

    Explanation:

    In short run cost there are usually fixed factors of production. That is, it refers to a firm's physical ability to produce.

    The U shape is as result of decline in average fixed costs eg Rent, and due to diminishing marginal returns to the variable input such as labor.

    Because of the law of diminishing returns, once the marginal product of labor initially rises, and reaches it's peak it then continuously falls as production increases thereby creating a U Shape graph.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The short-run average total cost curve is U-shaped because 1. average fixed costs decline continuously as output increases. 2. of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers