The long-run average total cost curve __________.

Question

graphically demonstrates the relationship between marginal cost and the level of output

graphically demonstrates average variable cost

is C-shaped

graphically demonstrates that there are diseconomies of scale as output increases after the initial range of output

Answer 1

The long-run average total cost curve is C-shaped.

This shape reflects the typical behavior of average total costs as output increases. Initially, as production increases, average total costs tend to decrease due to economies of scale. However, after reaching a certain point, average total costs may begin to rise due to diseconomies of scale. So, the C-shaped curve illustrates this relationship effectively.

The other choices provided do not accurately represent what the long-run average total cost curve demonstrates.