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The downward-sloping portion of the long-run average cost curve is a result ofmultiple choiceeconomies of scale.constant returns to scale.diseconomies of scale.decreasing marginal productivity.

Question

The downward-sloping portion of the long-run average cost curve is a result ofmultiple choiceeconomies of scale.constant returns to scale.diseconomies of scale.decreasing marginal productivity.

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Solution

The downward-sloping portion of the long-run average cost curve is a result of economies of scale.

Here's why:

  1. Economies of scale refer to the cost advantages that a business obtains due to expansion. It's the savings in cost per unit that a business experiences as it increases the size of its operation.

  2. In the context of the long-run average cost curve, economies of scale are represented by the downward-sloping portion of the curve. This is because as output increases, the average cost of production decreases, indicating that the firm is experiencing economies of scale.

  3. On the other hand, constant returns to scale occur when the output increases by the same proportion as all inputs. This would be represented by a flat, not downward-sloping, portion of the curve.

  4. Diseconomies of scale occur when a company grows so large that the costs per unit increase. It happens when a company is too big to manage efficiently. This would be represented by an upward-sloping portion of the curve.

  5. Decreasing marginal productivity is a concept in economics where the marginal product of an input (like labor or capital) decreases as the quantity of that input increases, holding all other inputs constant. This concept doesn't directly relate to the shape of the long-run average cost curve.

So, the correct answer is economies of scale.

This problem has been solved

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