CFA Practice Question

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CFA Practice Question

The short-run average total cost curve is generally assumed to be ______.

A. U-shaped
B. upward-sloping
C. downward-sloping
Correct Answer: A

While short-run average total cost usually declines at first, the presence of diminishing marginal productivity implies that short-run average total cost eventually increases, giving the short-run average total cost curve a U-shape.

User Contributed Comments 2

User Comment
boddunah what about LRAC curve?
in the long run ,all inputs are,plant size so LRAC should be downward sloping.right?
boddunah technology and plant size use capital so fixed costs should go low production level, high LRAC and at high production level , low LRAC .anyone wanna add more?
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