Principles of Microeconomics
11th Edition
ISBN: 9780133024166
Author: Karl E. Case
Publisher: PEARSON
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Question
Chapter 9, Problem 1P
To determine
Whether to agree or disagree with the given statements.
Expert Solution & Answer
Answer to Problem 1P
Option (a): Disagree
Option (b): Disagree
Explanation of Solution
Option ‘a’:
A firm which operates under constant returns to scale has a flat long-run average cost curve. Thus, the given statement is disagreed.
Option ‘b’:
The given statement is not true because the firm continues production until the total revenue covers the total variable cost and not the total fixed cost.
Economics Concept Introduction
Fixed cost: Fixed cost is defined as the cost which is independent of the level of output or production of a firm.
Variable cost: Variable cost is defined as the cost which depends on the level of production or output of a firm.
Marginal cost: Marginal cost is defined as the additional cost that is incurred due to the production of an extra unit of output.
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Chapter 9 Solutions
Principles of Microeconomics
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