Economics · Production and Costs
Consider the following statements regarding the Long-Run Average Cost (LRAC) curve: (a) A downward-sloping segment of LRAC implies Increasing Returns to Scale (IRS). (b) An upward-sloping segment of LRAC implies Decreasing Returns to Scale (DRS). (c) Constant Returns to Scale (CRS) occurs at the minimum point of the LRAC curve. (d) The LRAC curve lies above all Short-run Average Cost (SAC) curves at every point. Which of the statements given above are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1(a), (b), and (c)✓
- 2(a), (c), and (d)
- 3(b), (c), and (d)
- 4(a), (b), and (d)
Correct answer
(a), (b), and (c)
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