Most empirical studies show that firm's cost curves ?
Correct answer: D. slope down to the right and then level off.
- A. slope up to the right
- B. are U-shaped
- C. slope down to the right
- D. slope down to the right and then level off.
Explanation
Empirical evidence often finds long-run cost curves falling initially because of economies of scale and then becoming nearly flat as scale economies are exhausted. This gives the curve a downward-sloping, levelled-off shape rather than the sharply U-shaped form often used in basic theory.
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