Pregunta
\begin{tabular}{l} Hubert owns a scooter store. Last year his average cost of selling a \\ scooter was \( \$ 1,000 \). If he expands the size of his store this year and \\ sees his average cost remain the same, his long-run average total cost \\ curve should be \\ OA) horizontal. \\ OB) downward sloping. \\ \hline OC) upward stoping. \\ \hline OD) U-shaped. \\ \hline\end{tabular}
Ask by Parsons Bernard. in the United States
Mar 15,2025
Solución de inteligencia artificial de Upstudy
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The long-run average total cost curve is horizontal.
Solución
1. The problem states that Hubert’s average cost of selling a scooter is \( \$1,000 \) and it remains unchanged when he expands his store.
2. In the long run, when a firm experiences constant average costs as production increases, it indicates that the firm is operating under constant returns to scale.
3. A constant returns to scale is reflected in a horizontal long-run average total cost curve.
4. Therefore, the correct answer is:
- **OA) horizontal.**
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If Hubert's average cost of selling a scooter remains the same despite expanding his store, it suggests that he is experiencing constant returns to scale. This means that the costs per scooter do not increase or decrease significantly as he produces more. Hence, his long-run average total cost curve would be horizontal, reflecting that he can scale up his operations without changing his average cost per unit. While many businesses may face increasing or decreasing costs as they scale, in this scenario, Hubert's consistent average cost represents an ideal situation where efficiencies are maintained. It's a great reminder that business growth doesn't always come with rising costs!
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