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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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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