APFIVE Long-Run Average Total Cost Curve
If a business observes diminishing marginal returns from its input use in the short run, how should it expect its long-run average total costs (LATC) curve relatedly behave?
A
The LATC remains flat indicating consistent returns across different scales of operation.
B
The LATC spikes up sharply with every addition of input suggesting immediate diseconomies of scale.
C
The LATC will continually decline reflecting ongoing improvements from learning by doing.
D
The LATC may initially decline due to economies of scale but eventually rise after reaching minimum efficient scale.
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