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AP® Microeconomics

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Long run ATC curve

APMICR-VGXZOW

Isabelle Rose, an Economist, is attempting to explain long-run costs to her friend Charlie, who owns Charlie’s Chocolate Boutique, a small candy shop that specializes in unique and high-end candies.

In her explanation, Isabelle uses the long-run average total cost curve, which

A

displays declining unit costs so long as output is increasing.

B

has a shape which reflects the law of diminishing returns.

C

has a shape which is the inverse of the law of diminishing returns.

D

can be derived by summing horizontally the average total cost curves of all firms in an industry.

E

indicates the lowest unit costs achievable when a firm has had sufficient time to alter plant size.