Question

For the average total cost curve of a firm without economies of scale, what happens to costs as output increases?


Costs go down.


Costs go up.


Costs initially go down and then go up.


Costs initially go up and then go down.

Answer 1

For a firm without economies of scale, as output increases, costs typically go up. This means that the average total cost curve will rise as production increases.

So the correct answer is:

**Costs go up.**