Asked by
Shila Azman
on Nov 04, 2024
Verified
As existing firms exit an increasing-cost industry
A) the LRAC curve shifts down.
B) the LRAC curve shifts up.
C) the position of the LRAC curve doesn't change, but firms move down their LRAC curve.
D) the position of the LRAC curve doesn't change, but firms move up their LRAC curve.
LRAC Curve
Long-Run Average Cost Curve, a graphical representation showing the minimum cost at which any output level can be produced in the long run.
Exiting Firms
Businesses that are leaving a particular market due to various reasons such as unprofitability, strategic realignment, or market saturation.
Increasing-Cost Industry
An industry in which production costs increase as the industry's output expands.
- Investigate the role of internal and external economies and diseconomies of scale in shaping the long-term average costs.
- Identify the factors leading to movements along or shifts of the long-run average cost curve in response to industry dynamics.
Verified Answer
MA
Learning Objectives
- Investigate the role of internal and external economies and diseconomies of scale in shaping the long-term average costs.
- Identify the factors leading to movements along or shifts of the long-run average cost curve in response to industry dynamics.